Contents Corporate information 01 Ten years at a glance 02 Directors’ report 03 Management discussion and analysis 13 Corporate governance report 19 Auditors’ report on standalone financial statements 31 Standalone financial statements 34 Statements relating to subsidiary 56 Auditor's report on consolidated financial statements 57 Consolidated financial statements 58 Forward-looking statement In this Annual Report we have disclosed forward-looking information to enable investors to comprehend our prospects and take informed investment decisions. This report and other statements - written and oral - that we periodically make, contain forward-looking statements that set out anticipated results based on the management’s plans and assumptions. We have tried wherever possible to identify such statements by using words such as ‘anticipate’, ‘estimate’, ‘expects’, ‘projects’, ‘intends’, ‘plans’, ‘believes’ and words of similar substance in connection with any discussion of future performance. We cannot guarantee that these forward-looking statements will be realized, although we believe we have been prudent in assumptions. The achievement of results is subject to risks, uncertainties and the underlying assumptions undergoing change. Should known or unknown risks or uncertainties materialise, or should underlying assumptions not materialise, actual results could vary materially from those anticipated, estimated or projected. Shareholders & Readers should bear this in mind. We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise.
Transcript
ContentsCorporate information 01 Ten years at a glance 02 Directors’ report 03 Management discussion and
analysis 13 Corporate governance report 19 Auditors’ report on standalone financial statements 31Standalone financial statements 34 Statements relating to subsidiary 56 Auditor's report on consolidated
Forward-looking statement In this Annual Report we have disclosed forward-looking information to enable investors to comprehend our prospects and take informed
investment decisions. This report and other statements - written and oral - that we periodically make, contain forward-looking statements that set
out anticipated results based on the management’s plans and assumptions. We have tried wherever possible to identify such statements by using
words such as ‘anticipate’, ‘estimate’, ‘expects’, ‘projects’, ‘intends’, ‘plans’, ‘believes’ and words of similar substance in connection with any
discussion of future performance.
We cannot guarantee that these forward-looking statements will be realized, although we believe we have been prudent in assumptions. The
achievement of results is subject to risks, uncertainties and the underlying assumptions undergoing change. Should known or unknown risks or
uncertainties materialise, or should underlying assumptions not materialise, actual results could vary materially from those anticipated, estimated
or projected. Shareholders & Readers should bear this in mind.
We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or
otherwise.
1Annual Report 2008-09
Corporate Information
BOARD OF DIRECTORS
Dinesh B. Patel Chairman
Arun P. Patel Vice Chairman
Ramnikbhai H. Ambani
Ashwin Lalbhai Shah
Rooshikumar V. Pandya
Indira J. Parikh
Dr. Rajesh B. Parikh
Dr. Lavkumar Kantilal
Rahul A. Patel Managing Director
Amit D. Patel Managing Director
S.B. Dangayach Managing Director
MANAGEMENT TEAM
Rahul A. Patel Managing Director
Amit D. Patel Managing Director
S.B. Dangayach Managing Director
L.M. Rathod Group C.F.O. & Company Secretary
Sunilkumar Kanojia Group President (Corporate)
Sanjib Roy Senior President – SBU-I (Plastic Div.)
S. Venkatachalam President – SBU-II (Plastic Div.)
B.R. Jayswal President – Fin. & Acc. (Plastic Div.)
Rajan Gulabani Vice President – Marketing (Plastic Div.)
S.M. Anerao Vice President – Marketing (Plastic Div.)
A.C. Saxena Vice President – Marketing (Plastic Div.)
Balakumar Rajgopalan Vice President – Housing (Plastic Div.)
Shashidhar B.C President – Marketing. (Textile Div.)
Ashoke Maitra President – Opr. (Textile Div.)
R.A. Sharma President – Proc. (Textile Div.)
Manven Dubey Vice President – MIS
Siddhartha Jha Vice President – Tech. (Textile Div.)
Your Directors take pleasure in presenting the 78th AnnualReport and audited accounts for the financial year endingMarch 31, 2009.
Financial resultsThe financial performance of your Company for the year2008-09 is given below:
(Rs. in crore)2008-09 2007-08
Gross profit 404.06 332.23Less : Depreciation 62.40 51.70Profit before tax 341.66 280.53Less: Provision for taxation - current tax (including FBT of Rs. 1.70 crore) 41.32 37.12Deferred tax 31.24 27.08Profit/(loss) after tax before prior period items 269.10 216.33Excess/(short) provision for taxationin earlier years (net) (2.39) –Profit after tax 266.71 216.33Balance brought forwardfrom previous years 456.16 280.80Profit available for appropriation 722.87 497.13AppropriationsGeneral reserve 30.00 25.00Debenture redemption reserve 1.17 –Proposed dividend on equity shares 15.02 13.65Tax on dividend 2.51 2.32Balance carried to balance sheet 674.17 456.16Total 722.87 497.13
Review of numbersThe financial year 2008-09 challenged the sustainability ofyour Company. Surging oil prices in the first half and theappreciating rupee dampened the plastic and textile sectors’sentiments. The second half witnessed the worst globalmeltdown in decades, adversely impacting global corporatesand governments and leading to a global financial crisis anddemand destruction across all sectors.
Your Company’s ability to innovate solutions, marketconcepts and create new markets where none existed beforeenabled a sustainable business model capable ofwithstanding any adverse external effects. Your Companystrategically widened product, project and service portfolios,maintaining an overall growth momentum despite segmentalimbalances created by external economic factors. YourDirectors are pleased to inform that despite these roadblocks,your Company’s performance was commendable during theyear under review.
• Gross turnover grew 10.71% from Rs. 1,790.29 crore in2007-08 to Rs. 1,982.04 crore in 2008-09.
• EBIDTA grew 20.48% from Rs. 388.48 crore in 2007-08 toRs. 468.03 crore in 2008-09.
• Profit after tax grew 23.28% from Rs. 216.33 crore in2007-08 to Rs. 266.71 crore in 2008-09.
• Cash plough back in the business grew 21.62% from Rs. 332.23 crore in 2007-08 to Rs. 404.06 crore in 2008-09.
• Earning per share stood at Rs. 19.68 (basic) and Rs. 19.68(diluted) in 2008-09.
DividendYour Company practices an intelligent policy of maintaining aprudent balance between rewarding its shareholders and itsneed to fund growth initiatives. This is reflected in a morethan 26.31% CAGR over the last decade and a 75-yearuninterrupted dividend payout record. In keeping with thispolicy, your Directors are pleased to recommend a dividendof Rs. 1.10 per equity share on a face value of Rs. 2 each on13,64,95,433 equity shares and any further shares that maybe allotted by the Company following the conversion ofbonds prior to October 1, 2009. In the previous year, Re. 1 per equity share was distributed on a face value of Rs. 2each on 13,64,95,433 equity shares. This dividend will besubject to the approval of shareholders, financial institutionsand banks.
Business review and divisional performanceA detailed discussion of the performance of operations ofyour Company is given elsewhere in this annual report under‘Management discussion and analysis report’
1) Plastics divisionThe plastics division grew 15.52% from Rs. 1,311.73 crorein 2007-08 to Rs. 1,515.32 crore in 2008-09, retaining itsposition as the Company’s key growth engine. Itaccounted for 80.46% of your Company’s revenue in2008-09 against 79.22% in 2007-08. The growth wasprimarily accelerated by the prefabs and the monolithicconstruction segments. Other growth drivers included thecustom moulding and water tanks segments. YourCompany introduced a number of novel products and‘complete solutions’ which reinforced their brand name,reflected in growing recall and market share.
Monolithic construction: Your Company’s affordablehousing programme yielded excellent results and wasclearly recognised as a leader in the mass housing forEWS/LIG segment. The monolithic concrete constructiontechnology has been recognised as the best means for
4 Sintex Industries Limited
delivering superior-quality and low-cost mass housingsolutions. The Central Government’s initiative to providehomes to every family below the poverty line will boost theCompany’s growth plans.
Your Company is in the process of negotiating newhousing solution contracts in several states. Besides, theCompany is looking to develop and offer housing under itsown brand name, creating an outfit that will provideappropriate housing in relevant markets.
Your Company delivered a significant number of dwellingunits in 2008-09, registering a near four-fold revenuegrowth. Besides, the massive order book in this segmentprovides revenue visibility up to May 2010.
Prefabricated structures: The prefabs business, driven bygovernment sector and institutional customer demand,registered considerable growth over 2007-08. TheCompany’s prefabs received excellent response, becominga leader in small to medium size prefabs for health,education, site and road infrastructure.
Your Company successfully established a global footprint,exporting to Africa and parts of Asia for housing, schools,medical centres, kiosks and BT shelters, among others.
In 2008-09, your Company also introduced a new line formanufacturing continuous sandwich panels, which aresure to emerge as a revolutionary product group and willhelp the Company redefine construction. These panels arenot only insulated but possess superior structural strengthenabling the Company to create walls and roofs that willreplace traditional built-up structure construction methods.With the use of these panels, your Company will be ableto create new markets for this product line.
In tune with swift changes in the telecom space, yourCompany registered as a total solution provider, providinga consistent and significant growth opportunity over thecoming years.
Your Company expanded its range of doors and alsowitnessed increasing acceptance of PVC windows owing tothe various benefits they offer against traditional windows.Doors and windows coupled with plastic sections willdeliver impressive growth in years to come.
Custom moulding: Your Company shared excellentbusiness relationships with the electrical sector. YourCompany is one of the largest enclosure manufacturers forvarious products like meters, fuses and electricalequipment, among others. Your Company also servicedutility companies in both private and public sectors.Additionally, your Company executed turnkey projects forlast mile connectivity in Rajasthan, Karnataka and Gujarat.
In the FRP tanks segment, your Company’s products wereapproved by IOCL and other oil marketing companies.
Your Company actively pursued business in OEM and
secured approval from companies like John Deere, M&M,Cummins and Kirloskar Engines, among others forspecialised and customised products.
Liquid management solutions: Water tanks, thefoundation of your Company maintained its topline owingto the significant reduction in price gap between theorganised and unorganised sectors and an extended, pan-India semi-urban and rural reach. As a product extension,your Company successfully launched the septic tanks. Also,your Company developed and marketed decentralisedwastewater treatment systems in collaboration with AquaNishihara Corporation Ltd., Thailand and Japan. Otherinnovative solutions which received heartening acceptancewere the rain water harvesting and grey water recyclingsystems.
Material handling solution: Your Company’s materialhandling segment registered positive growth. YourCompany decided to add racking systems and equipmentto its range, offering a total material handling solution toindustries and institutions which would enhance itsbusiness.
New initiativeGreen initiatives and prospectsYour Company integrated certain “green” elements. Ourassociation with CEPT University, Ahmedabad helpedspread awareness regarding green and sustainablebuilding materials and technologies. Under Sintex Chair,CEPT has signed an MoU with the Indian Green BuildingCouncil for evaluation, approval and recommendation ofvarious materials and technologies that form a part ofgreen buildings in India.
The initiatives taken under this chair will help the countryin general and your Company in particular, by bringingabout a green orientation in the field of built-upstructures.
In the forthcoming years, your Company will be able tooffer affordable green housing solutions using severaltechnologies like decentralised wastewater treatmentsystems, grey water recycling systems, solar water heatingsystems and rain harvesting structures.
2) Textiles divisionDespite the sizeable reduction in global consumptionexpenditure impacting textile purchases, the textilesdivision grew 7.01% from Rs. 343.97 crore in 2007-08 toRs. 368.09 crore in 2008-09. Although this division’scontribution to the Company’s revenue was 19.54% in2008-09 against 20.78% in 2007-08, this businesssegment continued to be a value driver.
Your Company undertook a number of businessstrengthening initiatives in 2008-09:
• Installed state-of-the-art equipment in the spinning and
5Annual Report 2008-09
weaving section to improve product quality andmachine productivity.
• Added two new buyers in the UK and added a numberof brands in the domestic market.
• Added a new business house which will grow the ladieswear business.
• Launched the ready-to-stitch cut pieces and small metrelengths for retailers on a pan-India basis.
• Ventured into the technical textile segment with tents,water proof and fire retardant fabrics for the defencesegment.
• Developed about six new finishes and seven newproducts to grow our addressable market.
The contribution from the new revenue verticals, namelywomen’s wear and furnishing, increased over the previousyear.
Subsidiaries - performance1) Zeppelin Mobile Systems India Ltd.
The Company’s topline declined from Rs. 127.26 crore in2007-08 to Rs. 110.82 crore in 2008-09 owing to anorder for a leading service provider which was completedbut could not be converted into revenue. Despite negativetopline growth, Zeppelin sustained profitability growthmomentum by widening product portfolio and addingthree new clients. Additionally, the Company receivedapprovals for its composite shelter from Bharti Infratel Ltd.which would grow the Company’s size and profitability inthe coming years. Also, the Company received productapprovals from BSNL and ITI Rae Bareli. It received specificapprovals on certain products:
• For supplying towers to Aircel from IIT, Chennai
• For refrigerated body for Tata ACE
As a significant value addition, the Company acquiredDigvijay Group, an end-to-end communication solutionprovider and emerged as a total solution provider in thetelecom space from a conventional product supplier.
2) Bright AutoPlast Pvt. Ltd.Bright AutoPlast reported a Rs. 126.66-crore topline withimproved profit margin during the period under review.The bottomline improved owing to the addition of newcustomers, acceptance of products for new platforms ofexisting clients. The Company commissioned its secondfacility at Chennai in March 2009; this is expected to addsignificantly to growth and profitability over the comingyears.
The Company’s Pune unit was awarded the coveted TS-16949 certificate and its Chennai facility received the ‘BestSupplier’ Award in spares by MOBIS.
3) Wausaukee Composites Inc. (WCI)The Company registered a turnover of USD 44.11 mn in
2008-09. During the year under review, WCI added animportant client ― New Flyer Bus Company. New Flyer,the largest North American bus manufacturer, transferredits account to WCI, a programme worth around USD 1.20mn annually. The program was launched at Owosso,Michigan. The launch of the Harley-Davidson, Tri-GlideMotorcycle Body Programme was a highly successfulprogramme for the Company. With a long-term view ofwind energy development, especially in North America, theproduction of wind turbine nacelles and blade hub coversfor Acciona Wind Energy and Clipper Wind was on anupward trend.
Additionally, the Company was awarded the SiemensTransportation Systems as well as Salt Lake City InteriorComponents Programme of mass transit segment. It alsoreceived a new baggage scanner project for AnalogicCorporation for the medical imaging segment.
4) Nief Plastics SADuring 2008-09, Nief Plastics recorded a turnover of Euro 113.68 mn. Nief Plastic manufactures a wide varietyof plastic products with applications in the automotive,electrical and electronics, aeronautics and defence,household appliances and building industries. Nief hasstrong presence across Europe, especially in high qualityinsertion moulding technology. Its clientele includesprestigious European and global brands namely ABB,Areva, EADS, Faurecia, Legrand, Schneider, Siemens,Snecma, ThyssenKrupp Automotive, Valeo and Visteon.Nief Plastic successfully entered into the high-growthaerospace sector. In October 2008, Nief Plastics acquiredAIP SAS – a Company present in the lucrative aeronauticand medical sectors. AIP is largely involved in plasticinjections.
Strategic acquisitions The Company strengthened its business during the year underreview through the following strategic acquisitions:
Digvijay GroupPursuant to a business transfer agreement dated June 16,2008, Zeppelin Mobile Systems India Limited, a Sintexsubsidiary, acquired the Digvijay Group for Rs. 64.52 crore.The Group essentially provides end-to-end communicationsolutions. The Group has a 3,600-TPA tower manufacturingfacility near Indore, Madhya Pradesh with the ability ofsupplying a variety of towers as per order design andspecifications. Its services include infrastructure development,installation and commissioning of towers and BT structures.Its communication solution comprises site acquisition,architecture planning, civil work, tower erection and sitemaintenance. Its core areas of operation comprise MadhyaPradesh and Chhattisgarh; its footprint extends to otherstates namely Gujarat, Maharashtra, Andhra Pradesh andUttar Pradesh, among others.
6 Sintex Industries Limited
AIP SASAIP specialises in CNC machining and is a leader in thisactivity. AIP’s market is split into three sectors — aerospace,medical and industry.
The consolidation of the turnover made in the aerospacesector, the diversification in the medical sector into value-added products, the contribution of complementaryprocesses would allow Nief Plastic to improve its offer inthese sectors. This buy-out will also enable Nief Plastic toacquire a new know-how i.e. CNC machining.
Non-convertible debenturesOn February 18, 2009, the Company issued 11.50% securedredeemable non-convertible debentures aggregating to Rs. 250 crore to LIC of India on a private placement basis forfinancing capital expenditure on existing operations, generalcorporate purpose and to meet long term working capitalpurpose as well as other expenditures as permitted by theinvestors.
The debentures would be redeemable in three annual equalinstallments at the end of the seventh, eighth and ninth yearfrom the date of allotment.
CARE has assigned “AA+” (“Pronounced Double A plus”)rating to these debentures. This rating indicates high degreeof safety with regard to timely payment of interest andprincipal on the instrument.
The aforesaid debentures are listed on the wholesale debtmarket of the Bombay Stock Exchange Limited.
Preferential warrants allotmentDuring the last year, the Company allotted 1,32,00,000warrants at a price of Rs. 454.74 per warrant (10% of theconsideration received upfront) to the Promoters’ Group onpreferential allotment basis and the warrants are optionallyconvertible into equity shares of Rs. 2 each within 18 monthsof allotment date.
During the year under review, the promoter group to whomthe warrants were allotted informed the Company of notexercising the balance warrants of 1,05,12,000 and theCompany, thereby, forfeits the 10% upfront amount of Rs. 47.80 crore as per the SEBI Guidelines and credited theamount to capital reserve.
Employee stock option schemeThe shareholders of the Company had approved of itsemployee stock option plan (Sintex Industries LimitedEmployees Stock Option Scheme 2006) in February 2006.This ESOPS is administered by the Sintex Employee WelfareTrust on the basis of recommendations of the CompensationCommittee of the Board. In terms of the plan, the Companyperiodically granted stock options to eligible employees. TheCompany will conform to the accounting policies specified inthe guidelines as amended periodically. The details of thescheme are set out in Annexure 1 of this report.
Changes in equity share capitalIn 2008-09, there was no change in the share capital of theCompany.
Scheme of arrangementThe Scheme of Arrangement between Sintex IndustriesLimited and its equity shareholders was approved by theBoard of Directors vide the Circular Resolution dated June 30,2008, the shareholders in its Court Convened meeting heldon September 15, 2008 and by the Honorable High Court ofGujarat vide its order dated March 25, 2009.
The Scheme envisages a financial restructuring exercise forthe Company by earmarking an amount of INR 200 crorefrom its Securities Premium Account as on March 31, 2008towards the “International Business Development Reserve”.International Business Development Reserve so created wouldbe utilised towards the permissible expenditure as per theScheme of Arrangement, on stand alone as well asconsolidated basis. The effects have been given in our booksof accounts.
DirectorsIn accordance with the requirements of the Companies Act,1956 and the Articles of Association of the Company, ShriRooshikumar V. Pandya, Shri Rahul A. Patel and Shri Amit D.Patel, retire by rotation, but being eligible offer themselvesfor re-appointment.
For the kind perusal of the shareholders, a brief resume ofeach of them, the nature of their expertise and the name ofthe companies in which they hold directorships and thedetails of membership of the committees of the Board areenclosed. Your Directors recommend their reappointment.
Fixed depositsYour Company did not float any deposit scheme.
Listing of shares and securitiesThe names and addresses of the stock exchanges where theCompany’s securities are listed are given below:
• The National Stock Exchange of India Ltd., Exchange Plaza,Plot No. C-1, G Block, IFB Centre, Bandra Kurla Complex,Bandra (East), Mumbai 400051.
The Company paid listing fees to all the above stockexchanges for 2009-10.
7Annual Report 2008-09
Corporate Governance ReportYour Directors adhered to the requirements set by theSecurities and Exchange Board of India’s CorporateGovernance practices and implemented all the stipulationsprescribed.
A separate Corporate Governance Report is furnished as apart of Directors’ Report and the Certificate from theCompany’s Auditors regarding compliance with theconditions of Corporate Governance is annexed to it.
Directors’ Responsibility Statement To the best of their knowledge and belief and based on theinformation obtained by them, your Directors make thefollowing statement in terms of Section 217(2AA) of theCompanies Act, 1956:
1. That in the preparation of the annual accounts for the yearending March 31, 2009, the applicable accountingstandards have been followed and there have been nomaterial departures.
2. That the Directors have selected such accounting policiesand applied them consistently and made judgments andestimates that are reasonable and prudent so as to give atrue and fair view of the state of affairs of the Company atthe end of the financial year and of the profit of theCompany for that period.
3. That the Directors have taken proper and sufficient carefor the maintenance of adequate accounting records inaccordance with the provisions of the Companies Act,1956 for safeguarding the assets of the Company and forpreventing and detecting frauds and other irregularities.
4. That the annual accounts for the year ending March 31,2009 have been prepared on a going concern basis.
Consolidated financial statementsThe company has made an application u/s. 212(8) of theCompanies Act, 1956 to the Central Government seekingexemption from attaching the Annual Accounts ofsubsidiaries and expects to receive the same.
The some key information has been disclosed in a briefabstract forming part of this Annual Report. Accordingly, thereport contains the consolidated audited financial statementsprepared as per Clause 41 of the Listing Agreement enteredinto with the stock exchanges and prepared in accordancewith the accounting standards prescribed by the ICAI.
Further, the annual accounts of the subsidiary companies andthe related detailed information will be made available to anymember of the Company/its subsidiaries at any point of time.The annual accounts of the subsidiary companies will also bekept for inspection by any member of the Company/itssubsidiaries at the registered office of the Company and thatof the respective subsidiary companies.
Conservation of energy, technology absorption, etc.A statement containing the necessary information requiredunder the Companies (Disclosure of Particulars in the Reportof Board of Directors) Rules, 1988 is annexed to this report asAnnex 2.
Particulars of emloyees The information required under section 217(2A) of theCompanies Act, 1956, read with Companies (Particular ofEmployees) Rules, 1975, forms part of this report as Annex 3.However, as permitted by section 219(I)(b ) (iv) of theCompanies Act, 1956, this Annual Report is being sent to allshareholders excluding the said Annexure. Any shareholderinterested in obtaining the particulars may obtain it bywriting to the Company Secretary at the registered office ofthe Company.
InsuranceAll the insurable interests of the Company, including plantand machinery, stocks, loss of profits, standing charges andinsurable interest are adequately insured.
Auditors M/s. Deloitte Haskins & Sells, statutory auditors of theCompany, retire and being eligible, have indicated theirwillingness to be re-appointed.
The Company has earmarked Rs 200 crores from SecuritiesPremium Reserve to International Business DevelopmentReserve Account, in accordance with the Scheme ofArrangement approved by the Honorable High Court ofGujarat vide its order dated March 25, 2009. There are noother observations/ comments of the auditors in their report.
Cost accounting recordsAs required under the order made by the CentralGovernment, the Company is maintaining necessary costaccounting records with respect to cotton textiles.
AcknowledgementsYour Directors express their gratitude for the cooperation andsupport received from vendors, customers, banks, financialinstitutions, shareholders and society at large. Your Directorsalso take, on record, their appreciation for the contributionand hard work of employees across all levels. Without theircommitment, inspiration and hard work, your Company’sconsistent growth would not have been possible.
On behalf of the Board,
Rahul A. Patel Amit D. PatelManaging Director Managing Director
Date : May 9, 2009Place : Ahmedabad
Disclosure pursuant to the provisions of SEBI (Employee Stock Option Scheme and Employee Stock PurchaseScheme) Guidelines, 1999
8 Sintex Industries Limited
Details of the grants as on March 31, 2009a. Total number of options covered under the plan 10,00,000b. Total number of options granted 10,00,000c. Pricing formula An exercise price of Rs. 91.70 per share shall be payable
by an employee pursuant to the ESOP Scheme.
The employee can opt for conversion of the options by applying to the Trust by a written notice during the exercise period, in a specified format accompanied by payment of the exercise price and all applicable taxes. Such notice is required to be provided by the employees to the Trust not less than 30 (thirty) days before the exercise of the options by the employee.
d. Vesting schedule All options granted on any date shall vest at the expiry of 36 months from the date of the grant
e. Options vested Nilf. Options exercised Nilg. Options lapsed Nilh. Variation of terms of options No terms of the ESOP scheme have been varied.i. Money realised by exercise of options No options have been exercised so far and therefore no
money has been realised till date by exercise of options.j. Total number of options in force 10,00,000k. Person-wise details of options granted to:
i) Directors 10,000ii) Key managerial employees 9,90,000iii) Any other employee who received a grant in any year of Nil
options amounting to 5% or more of options granted during that year
iv) Identified employees who are granted options, during any Nilone year equal to or exceeding 1% of the issued capital (excluding warrants and conversions) of the Company at the time of grant
l. Diluted earnings per share Not applicable as no options have been exercised.m. Weighted average exercise price An exercise price of Rs. 91.70 per equity share shall be
payable to the ESOP Scheme.n. Weighted average fair value of options Not applicableo. Description of method and assumptions used for estimating
fair value of options Not applicable
Annexure 1 to the Director’s ReportDisclosure pursuant to the provisions of SEBI (Employee Stock Option Schemeand Employee Stock Purchase Scheme) Guidelines, 1999
9Annual Report 2008-09
Annexure 2 to the Director’s ReportInformation required under Section 217(1)(e) of the Companies Act, 19561) Conservation of Energy
a) Energy conservation measures taken:1) Installed three captive power plants of 3.8 MW each and one 7.5 MW Gas Turbine Power plant, which are efficiently
working. Each unit generated is cheaper as compare to GEB cost per unit.
2) In textile division, FRP fans replaced in place of alluminium fans at Humidification plant ultimately resulting intosaving of energy.
3) Installation of Auto Transformer in Lighting power resulting into substantial power saving.
4) Condensate Water taken back into system for re-use resulting into saving of cost.
5) In plastic division during the year, several modifications were made in the moulding machines to increase theproduction with the same input of energy. This is expected to bring down the energy consumption. Several measureswere taken for redesigning the energy consumption in the other manufacturing departments.
b) Additional Investments and Proposals, if any, being Implemented for Reduction of consumption of energy.1) The Company has installed 7.5 MW Gas based power plant which is eco-friendly. In this plant, power generation is
cheaper. It has reduced use of fossil fuel considerably, resulting in reduction in GHG emission. Since GHG is reduced,we are going to get benefit of CDM Project. The Project is in final stage of approval. Company will get Carbon CreditBenefit shortly.
2) In Textile division we are installing High Efficient L. R. Ring frame machine in our Spinning Section in place of oldconventional Ring Frame machine resulting into achievement of substantial power savings.
3) In Plastics Division, we are considering to use energy efficient burners and energy efficient light fittings in the wholeplant.
c) Impact of the measures (a) and (b) above for reduction of the Energy consumption and consequent impact on thecost of Production of goods.1) Due to the installation of gas turbine power plant, the turbine can be run on multi fuels, ensuring operational
continuity in the event of any planned/un planned disruption in fuel linkage.
2) In Textile Division higher and good quality of production achieved with saving of considerable power consumption.
3) The above mentioned measures have resulted into energy saving and subsequent reduction in energy cost and hencein cost of production.
4) In Plastics Division the impact of energy saving devices will be peripheral in the beginning. It can however besubstantial if the whole programme is implemented.
d) Total energy consumption and energy consumption per unit of production in respect of the Company's products.Details are provided in Form A annexed hereto.
2) Technology Absorptione) Efforts made in technology absorption
a) We have been able to assimilate and develop products based on technology of Containment solutions, USA in thefield of underground tanks, manholes, wet wells etc.
b) We have been further able to develop several models of package type waste water treatment plants and septic tanksto address problem of wastewater treatment at site in a decentralized manner through technical collaboration withM/s. Aqua Nishihara Corporation Ltd., Japan.
c) We have also developed appropriate technologies and techniques in the field of windows, doors, SMC Products etc.
Details are provided in Form B annexed hereto.
3) Foreign exchange earnings and outgof) Activities relating to exports, initiatives taken to increase exports, development of new markets for products and
services and export plans.In Textile division, the Company has obtained quality certification “OEKO TEX” Standard 100 Certificate for Eco-friendly
10 Sintex Industries Limited
Current Year Previous Year
A) Power and Fuel Consumption
1. Electricity:
a) purchased: Unit (lacs) 151.26 81.47
Total Amount (Rs. lacs) 850.45 446.05
Rate/Unit(Rs.) 5.62 5.47
b) Own Generation
i) Through Captive Power Plant: (M&W)
Units(lacs) 182.42 342.80
Units per litre of Diesel/Furnace oil/Gas 3.71 3.51
Cost/Unit(Rs.) 4.28 4.69
ii) Through Captive Power Plant: (GT)
Units (lacs) 418.38 333.56
Units per SCM of Gas 3.33 2.95
Cost/Unit (Rs.) 5.13 6.79
iii) Through Diesel Generator:
Units (lacs) 5.20 1.19
Units per litre of Diesel 2.97 3.46
Cost/Unit (Rs.) 13.68 8.87
2. Furnace Oil: (Qty.Kilolitres) 1859.63 4169.49
Total Amount (Rs.lacs) 377.22 1117.08
Average Rate (Rs./litre) 20.28 26.79
FORM - AForm for disclosure of particulars with respect to consumption of energy.
Products, Certified by TESTEX, Switzerland. To develop export markets the Company has entered in to technical andmarketing tie up with leading design houses. These all has enhanced the competitiveness of our products in globalmarkets.
g) Total foreign Exchange used and earned.
(Rs. in Crore)
2008-09 2007-08
i) Foreign Exchange earned including direct exports. 33.30 40.04
ii) Foreign Exchange used 28.50 58.25
11Annual Report 2008-09
Current Year Previous Year
3. Others:
a) Natural Gas
Quantity Consumed in M3 6648.379 9133.962
Total cost (Rs.lacs) 319.12 295.47
Rate/Unit(1000 m3)(Rs.) 4800.000 3234.87
b) RLNG Gas
Quantity Consumed in (000) SCM 7651.749 7348.164
Total cost (Rs.lacs) 1640.19 1259.13
Rate/Unit (000 SCM)(Rs.) 21435.62 17135.28
c) L.P.G
Quantity consumed (in lacs kgs) 31.95 28.52
Total cost (Rs.in lacs) 1413.96 1210.43
Rate/unit (Kgs.) (Rs.) 44.25 42.43
Standard Current Year Previous Year
B) Consumption per Unit of Production
1. Electricity (Units)
Textile
a) Fabrics on production meters basis No 3.36 3.85
b) Yarn (per kg.) Specific 6.65 9.08
Plastic Containers (per kg.) standard as such 0.54 0.50
The consumption
Plastic Section (per kg.) per unit 0.81 0.68
depends
Sheet Moulding (per kg.) On the 0.62 0.57
Product
Thermoforming Mix 1.84 2.62
2. Furnace Oil (Textile – on production mtr.basis) 0.31 0.61
3. Others:
a) Gas(M3)
(Textile ( on production meters basis) 0.17 0.38
Plastic Containers (Per kg.) 0.23 0.23
Plastic Sections (Per kg.) 0.01 0.03
Sheet Moulding (Per kg.)
b) L.P.G
Plastic Containers (Per kg.) 0.23 0.21
The variation in consumption in power and fuel was due to a different product mix between current and previous year.
12 Sintex Industries Limited
FORM - BForm for disclosure of particulars with respect to absorption of technology,research & developmentResearch and Development (R & D)
1. Specific areas in which R & D carried out by the Company Prefab shops, prefab houses, kiosks, modular toilets, portable
toilets, underground water tanks, underground petroleum
tanks, septic tanks, package type wastewater treatment
systems, bamboo houses etc.
2. Benefits derived as a result of the above R & D. Plastics Division developed various technologies and
Techniques in the field of Plastics for the manufacture of
above products.
3. Future plan of action Plastics Division will continue to work on the improvement of
our major products as well as developing specialized
applications on existing processes.
4. Expenditure on R & D
a) Capital NIL
b) Recurring Rs. 1.28 crore
c) Total Rs. 1.28 crore
d) Total R & D expenditure as a percentage of total turnover 0.06%
Technology absorption, adaptation and innovation.
1. Efforts, in brief, made towards technology absorption, Efforts are made to improve cost effective technology
adaptation and innovation. for productive and quality improvement.
2. Benefit derived as a result of the above efforts e.g. The Plastics Division has introduced a number of new
product improvement, cost reduction, product products and opened up new areas of business.
development, import substitution etc.
3. Information regarding technology imported during the Not applicable.
last five years.
13Annual Report 2008-09
Management’s Discussion and Analysis
Indian economic overviewIndia’s economic growth moderated from 9% in 2007-08 to around 7% in 2008-09, primarily owing to the global financialmeltdown from the beginning of the third quarter of 2008-09 fiscal.
The Indian economy witnessed extreme volatilities in 2008-09; consider the following:• Economic buoyancy reflected by a 7.8% GDP growth in the first half of 2008-09
• Skyrocketing commodity prices as crude oil touched an all-time high of USD 147.27 per barrel in July 2008
• Unprecedented growth in investment and consumption-driven demand
• Inflation touched 12.63% in August 2008, highest in the last 13 years
• Forex reserves touched USD 253 bn as on April 11, 2009
The trend reversed in the second half of the year, which led to a sudden and steep downturn due to the following:• Collapse of leading global financial institutions
• Declining fund availability in the Indian market
• Dipping industrial production
• Economic slowdown recording lowest growth since January-March 2003 quarter
2004-05 2005-06 2006-07 2007-08 2008-09GDP at factor cost 7.5% 9.5% 9.7% 9.0% 6.7%Agriculture 0.0% 5.8% 4.0% 4.9% 1.6%Manufacturing 8.7% 9.1% 11.8% 8.2% 2.4%Construction 16.1% 16.2% 11.8% 10.1% 7.2%Financing, insurance, real estate and business service 8.7% 11.4% 13.8% 11.7% 7.8%
Government interventionThe Government of India announced two major stimuluspackages, totalling USD 115 bn, to enhance market liquidity.The packages are expected to provide a direct liquidity of USD 88 bn. Other key government initiatives comprise thefollowing:
• Reduced CENVAT from 10% to 4% to facilitate a reductionin products cost
• Allowed ECB funding for developing integrated townships
• Allowed accelerated depreciation of 50% for commercialvehicles up to March 31, 2009 to catalyse commercialvehicle offtake
• Reduced CENVAT to 4% on petroleum products
• Increased infrastructure investment for ports and highways
• Discouraged cement import by raising CVD and specialCVD/SAD
Besides, the Government of India initiated 90% grant tovarious state transport undertakings for the purchase of40,000 commercial vehicles, besides other infrastructureinvestments.
Expected stabilityThe fourth quarter of 2008-09 demonstrated a faint economicrevival owing to the government’s stimulus packages. Thedomestic economy is also expected to gain significantlyfollowing the continuance of the ruling UPA regime with alarger majority. The government is expected to acceleratefiscal reforms and investments to drive economic growth.
2005-06 2006-07 2007-08Gross capital formations (as a percentage of GDP at market prices) 35.5 36.9 39.1Savings rate (as a percentage of GDP at market prices) 34.2 35.7 37.7
Segmental reviewSintex is attractively positioned in the growing plastics andtextile businesses. The plastic division has a wide range ofproducts with numerous applications. In the textiles segment,the Company manufactures structured shirting fabrics, fabricfor ladies wear and is diversifying into other attractivesegments like furnishing and technical textiles. It is a leadingplayer in the corduroy segment in India.
14 Sintex Industries Limited
Plastic industry overviewIndia’s plastics industry has made significant achievementsever since it made a modest but promising beginning in 1957with the production of polystyrene. Continuousadvancements in polymer technology, processing machinery,expertise and cost-effective manufacturing are fast replacingthe conventional material in various user segments withplastics, a key segmental growth driver. Consequently, plasticis gaining importance in diverse segments and the per capitaconsumption is increasing rapidly.
Plastic, as a replacement of conventional metals, is gainingpopularity due to significant advantages:
• Airbus as use plastic fibre composites in wing boxes,reducing aircraft weight by 1.5 tones.
• Metal replacement with plastic improves vehicle mileage;petrol consumption is reduced by 750 litres across the lifeof the vehicle.
• Capturing wind power would be impossible withoutplastics; special plastics are used in the wind turbine coversand huge blades to tap into this environment friendlyenergy source.
• Plastic is used as efficient insulators and sealers, improvingenergy efficiency and reducing CO2 emission.
Around 20% of all plastics in Europe are utilised for productsin the building industry. After packaging, the buildingindustry represents the second highest user of plastics.
In India, the plastic processing industry comprises over30,000 units, which are producing a wide range of plasticproducts through the process of injection moulding, blowmoulding, extrusion and finally calendaring. At present, Indiaconsumes around 6.2 million tonnes of polymers annually. Itis creditable that India’s 90% plastic waste is recycled.
SCOT analysis of the Indian plastic industryStrengths Challenges• Strong polymer base • Low scale of production• Low cost labour • High cost of plastic for end-
use application• High percentage of • Low labour productivity
recycled plasticOpportunities Threats• Per capita consumption • Polymer imports from the
is lower than the world Middle East average
• Capture high value • Processing industries inexport segment where neighbouring countriesIndia doesn’t have a could lead to imports significant presence
• Increasing demand from • Environmental concerns with various sunrise industries plastic packaging, leading to
replacement by substitutes• Gaining popularity among
the automobile OEMs
Opportunities and outlookIndia’s plastic consumption is expected to grow significantlyover the coming years. This optimism is based on thefollowing realities:
• Growing oil prices have forced automobile majors toreplace conventional material (namely steel) with lighter,high-strength, custom moulded plastic components,increasing the fuel efficiency of vehicles. According to areport, the proportion of plastic in cars has doubled in thepreceding 30 years and will amount to about 20% by theend of the decade.
• Growing construction across India is driving the demandfor temporary structures for site office, bunk houses andother residential units.
• Enhanced government focus on education is fuelling thedemand for pre-constructed classrooms.
• Increasing focus on saving T&D losses is driving thedemand for plastics in the electrical segment.
Per capita plastic consumption (figures in Kg.)
Japan Europe USA China World India
90 90 80 27 20 6
[Source: The Financial Express February 4, 2009]
India’s per capita consumption is around 6 kg; this figure willdouble over the next three years and India is all set tobecome the third largest consumer of polymers globally.Besides, the bilateral trade between India and China in theplastic sector is expected to increase to USD 60 billion by2010 end from USD 38.7 billion in 2007. It is expected thatUSD 80 billion worth of new investment will take place inIndia's plastic industry over the next three-four years.
Strategic developments 2008-09• The Company invested Rs. 500.43 crore in its standalone
operations to enhance production efficiency.
• The Company associated with CEPT University, Ahmedabad,to work towards the development of green andsustainable building material. CEPT has signed a moreoverMoU with Indian Green Building Council, evaluating,approving and recommending various materials andtechnologies forming part of green buildings in India.
• Zeppelin Mobile Systems India Limited, a Sintex subsidiary,acquired Digvijay Group for Rs. 64.52 crore. The Groupessentially provides end-to-end communication solutions.Following the acquisition, Sintex transformed itself into atotal solution provider in the telecom space comparedwith being a product supplier.
• The Company is gradually moving from marketingproducts into offering solutions. As a first step in thisdirection, it offered turnkey solutions in energy T&D sector,providing the last mile connectivity for Rajasthan’s one lacconsumers.
15Annual Report 2008-09
• Nief Plastics strengthened its business in 2008-09 throughthe strategic acquisition of AIP. AIP’s market, a leader inCNC machining, is split into three sectors – aerospace,medical and industry. The turnover consolidation in theaerospace sector, the diversification of the medical sectorwith high value-added products and the contribution ofcomplementary process would allow Nief Plastic toimprove its product offering in these sectors. This buy-outwill also enable Nief Plastic to acquire a new know-howi.e. CNC machining.
• The Company achieved the Dun & Bradstreet RoltaCorporate Awards 2008 for being the best in the Indianplastic processing category.
• Zeppelin Mobile Systems India Limited diversified itsbusiness into telecom services (TSP) segment to offer thelarger portfolio to its customers in addition to productselling.
Developments in the plastics businessThe plastics business contributed about 81%to the gross turnover in 2008-09 against80% in 2007-08. The turnover fromthe plastic business grew about 12%in 2008-09, driven primarily by thebuilding product, monolithicconcrete construction and thecustom moulding segments.
Custom mouldingIn 2008-09, the Companysuccessfully managed sizeablevolumes of the plastic tanks forgensets from Cummins which wascustomised to suit their requirementin 2007-08. Moreover, the Companymade a significant headway in thisbusiness vertical. It has now secured approvalsfrom leading companies namely John Deere,Mahindra & Mahindra and Kirloskar Engines. This is expectedto lead to sizeable business volumes over the coming years.Further, it developed and supplied a microwave dish antennafor a US-based Company. This business was increased bygrowing the range from the initial 60 mm to 120 mm and180 mm.
Sheet moulded products (SMC)The Company is the largest manufacturer of enclosures inIndia. With the meter boxes gaining significant acceptanceamong utilities, the Company focused on marketingdistribution boxes during the fiscal under review. The keyachievement in this segment was that we successfullycompleted two rural electrification projects on a turnkeybasis, a first for the Company, which transformed its imagefrom that of making and marketing products to offering
turnkey solutions. Besides, the Company added a number ofnew products to its existing list.
• Introduced V-cross arms for electricity transmission poleswhich received the approval from the Gujarat ElectricityBoard. The Company is working to get the productapproved by other state electricity boards.
• Developed SMC components for Cummins.
• Developed value-added fuse boxes and meter boxes; theCompany marketed the energy audit enclosures anddeveloped the FRP-based cable trays which has gainedsignificant acceptance in the market. The Company isusing these trays as a part of the BT shelter solution.
Additionally, the Company developed first-time FRP-basedproducts, namely manhole covers along with the structures,sign boards and ice boxes (for an Australian client). Theseproducts are expected to grow the revenue basket in 2009-10.
Industrial applicationsThis business vertical witnessed a large number of
product developments, yielding considerablerevenue over the coming years.
•The Company introduced palletracking systems for the first time. In
addition, the Company tied upwith an Indian fork lift companyto provide complete rackingsolutions. The sandwich panelsfrom the prefab segment helpthe Company provide acomprehensive warehousing
solution. The Company successfullycompleted the first-of-its-kind
warehousing order in Punjab in 2008-09. This is expected to be replicated in
other states over the medium term.
•In the specialised box business, the Companyachieved considerable mileage. Besides making
specialised boxes for Bharat Electronics Ltd., it alsoreceived enquiries from a US Company for customisedcarrier cases which is at an advanced stage ofdevelopment and should result in revenue growth overthe coming years. The Company is also developingcustomised and highly specialised carrier cases for anIsraeli corporate.
• Other key developments include customised fish boxes,ice-cream boxes and bus seats, among others while areexpected to contribute significantly to the segmentalrevenue.
Building products divisionThis is the biggest division for the Company; it contributed20.98% to the revenue. This business segment comprisestanks, doors and windows.
Indiatook 30 years to
consume the first 500KT of polymers, but onlyfive years to double that
figure, thanks toeconomic reforms
[Source: The Economic Times– June 27, 2008].
16 Sintex Industries Limited
Water tanks: Despite being a mature business segment withsizeable volumes, the tanks business maintain its growth in2008-09. This success was due a multi-pronged approach. Afocus on two brands (Sintex and Reno) strengthened thedistribution network, three-folded distributors and created asecond tier of retailers to extend their reach to capitalise onpan-India opportunities. Further, the Company expanded itsproduct offering to include underground and large panel typewater storage tanks, which are expected to fuel the growthof the business vertical in the coming years.
Additionally, the Company made significant headway in tanksfor other applications. The FRP underground petroleum tanksreceived the approval from IOC. The client has made itmandatory to use such tanks in all IOC pumps in the West,creating a sizable business opportunity. The Companysuccessfully installed a massive number of tanks during theyear among diverse customer segments.
Doors and windows: The strengthened dealer networkfacilitated a sizeable growth in these products. The Companystrengthened its geographic presence across four states.Besides, the PVC windows received increasing acceptance dueto its ability to reduce the heat in houses and minimise theexternal sound, growing business volumes. Besides, thewindows business was driven by innovative measures:
• Expanded the range of doors in terms of material qualityand varieties of designs to cover multiple applications.
• New systems were introduced to make the windows morefunctional and cost-effective, increasing their acceptability.
• Adopted a two-pronged approach by targetinginstitutional and retail customers.
• Provided equipment and training to the franchisees andretailers for making the windows (with the knocked-downkits) for its clients.
Prefabricated products divisionThis segment comprised prefabricated structures, BT sheltersand monolithic concrete construction. This vertical grew18.58% and contributed 54.91% to the Company’s topline.
Highlights• Commissioned a new line for manufacturing continuous
sandwich panel, which is expected to emerge as a newconcept for the construction sector.
• Established its footprint in Africa and Southeast Asia forthe first time.
BT shelters: The Company made significant progress in thissegment in terms of product offering. As opposed toproviding shelters alone, the Company entered into turnkeysolutions which included thermal management systems,which helped optimise the operating costs for the telecomservice providers. The solution included the Phase ChangeMaterial (PCM) and Power Interface Unit (PIU). While thePCM acted as a 6-7 hour back-up for the generator set, the
PIU optimised energy consumption in the cell site. Inaddition, the Company also established a foothold in theimplementing cell site sharing projects for large brands. Theimpact of the meltdown took a toll on this business verticalas some key clients postponed their infrastructure layoutplans which are expected to materialise in the current year,providing significant revenue visibility.
Monolithic concrete constructions: This business was thebest performing vertical in 2008-09 which registered a 115%growth in revenue. The Company delivered projects in Northand West India; it can further extend its footprint acrossother states from the current five states. It improved the formwork for the construction of buildings, enhancing life of theform work and optimising construction cost of the structures.
Prefabricated structures: Revenue from the segmentincreased 4.70% from Rs. 533 crore in 2007-08 to Rs. 558crore in 2008-09. The Company successfully established aninternational footprint for the prefabricated structures in theglobal market namely Africa and Southeast Asia for housing,schools, kiosks, medical centres and BT shelters. During 2008-09, the Company made significant developments in thissegment. It made important breakthroughs by introducingcontinuous sandwich panels, redefining construction. Thisallows the Company the flexibility of customising the inputfor specific applications. Besides, it also allowed the Companyto graduate from small prefabricated structures to largevariants such as factory sheds, warehousing shelters,bungalows, etc. This development will significantly enhancethe Company’s competitive edge and increase growthavenues.
Waste management systemThe Company diversified into waste water managementsystems in 2008-09, comprising solid and liquid wastemanagement systems.
Solid waste management solution: The Company marketedwaste collection equipment (tippers and loaders) togovernment agencies and other retail clients; it set itsfootprint in Tamil Nadu, Kerala and Karnataka. Moreover, theCompany also marketed containers customised for the wastetype being collected in these geographies.
Liquid waste management solution: The Companysuccessfully launched the underground seamless septic tank.The Company introduced decentralised wastewater treatmentsystem (DEWATS), grey water recycling system and rainwaterharvesting structures. The DEWAT was developed andmarketed in collaboration with Aqua Nishihara CorporationLtd. of Thailand and Japan. This system was successfully testmarketed in 2008-09 and is expected to be a significantrevenue driver over the coming years, following governmentimpetus to the DEWAT as against the centralised wastewatertreatment systems.
17Annual Report 2008-09
Performance of the plastics businessThe plastics business generated a Rs. 1607.62 crore turnoverin 2008-09 against Rs.1438.61 crore in 2007-08, a 12%growth. This business vertical contributed 81% to theCompany’s turnover (standalone) against 80% in 2007-08.This change was largely contributed by the four-fold growthin the monolithic concrete construction business. The prefabvertical grew at a mature 4.70% over 2007-08.
The Company’s stringent cost reduction initiatives resulted ina 139-basis point increase in the EBIDTA margin from 23.46%in 2007-08 to 24.85% in 2008-09. Additionally, a strong orderbook in the monolithic construction segment provides a sizeablerevenue visibility up to May 2010. Besides, its global subsidiarieswill enable the Company to strengthen its global presence.
Road aheadGoing ahead, the Company would enhance focus on thefollowing initiatives:
• Alteration in the business model for the domestic marketin some business segments.
• Value addition in the existing product basket in someother segments.
• Growing focus on the global market through certainimportant business verticals.
The Company is altering its business model from productsales to offering total solutions. As a first step in this directionit acquired the Digvijay Group which would enable it toprovide network management services as opposed tomarketing BT shelters, significantly widening its businesshorizon. In the energy sector too, the Company establishedits foothold into providing a rural distribution solution (fromthe substation to the end consumer).
The Company’s warehousing solutions (prefabs and pallets),the racking system and the equipment are expected to gainacceptance in multiple states following a growing demand forstorage. As a focused approach, the Company is looking toreplicate its existing success across a few states of its strength.
The monolithic concrete construction business is expected togrow significantly over the coming years owing to itsincreasing acceptability as a fast, secure and low-cost housingsolution. The Company expects to emerge from buying acontractor to being a developer, enhancing margins.
Besides, the Company is focusing on customising products forleading international brands. This is expected to grow therevenue and profitability over the coming years.
Textile industryThe Indian textile industry accounts for around 4% of theGDP, 11% of the industrial production and 16% of India’stotal export earnings. The industry employs over 35 millionpeople. With direct linkages to the rural economy and theagriculture sector, it is estimated that one of every six
households in the country depends on this sector, eitherdirectly or indirectly, for its livelihood.
Fact file• The contribution of the textile sector to India’s IIP – 10.9%
• The contribution of the textile sector in manufacturing –13.73%.
• The compound annual rate of the sector during 2001-07 –4.6%.
• The growth in India’s IIP during 2001-07 – 6.9%.
• The growth in India’s manufacturing sector during 2001-07 – 7.4%.
• India’s installed capacity in looms, the world’s largest –60.39%.
• India’s share of production of fibre and yarn in the worldproduction – 12.36%.
• FDI inflow in the sector – $575 million.
• The share of FDI in textiles of the total FDI inflow – 1.05%.
ExportThe textile sector is among the top three foreign-exchangeearners, along with gems and jewellery and IT. Rising rawmaterial cost impacted, Indian exports significantly. India'sgarment sales to the US were the worst hit due to theeconomic slowdown – it shrunk 1.25% in 2008. But thistrend is expected to be short lived owing to two importantfactors:
• The Chinese textile industry is looking to shift itsproduction base to India due to the increased labour cost,appreciation of the Chinese Yuan and reduced subsidyfrom the government. This is expected to significantlyreduce its export dominance to the US in favour of India.
• The US economy is expected to revive from the second halfof 2009 which augurs well for the Indian textile industry;besides the depreciation of the Indian rupee against theUS dollar is expected to improve the profitability of textileexporters.
Opportunities and outlookThe outlook for the textile sector appears to be reasonablyoptimistic, based on facts and credible estimates:
• With the rupee losing value against the dollar, textiles andapparel exports are likely to gain 20% in the financial year.Also, the depreciation of the Indian rupee vis-à-vis the USDollar as against the Chinese Yuan’s appreciation hasenhanced India’s competitive edge in the global textile trade.
• Historically under-penetrated, India’s textile and apparelindustry is expected to grow from USD 52 billion in 2006to USD 110 billion by 2012. As per Textile Ministryestimates, India will achieve an export target of USD 50 bnby 2012. Compared with the average global per capitaconsumption of 7.7 kg, per capita consumption in the countrynow stands at 2.5 kg, reflecting a growing market potential.
18 Sintex Industries Limited
• India's technical textile industry will be worth USD 12-15billion by 2012, around 12% of the global value.Consumption of non-wovens and technical textiles in Indiais also expected to grow from 100 gm now to 250 gm in2012. The national mission to promote technical textileshas a budget support of over Rs. 1,600 crore (USD 170million) for the next five years.
Developments 2008-09• Introduced technical textiles including catering to the
defence requirements.
• Developed various specialised finished products thatinclude airo finish, carbon finish, fashion coated productsand nano care, among others.
• Developed new products by using various yarn blendsincluding metallic yarn, silk yarn and melange yarn, amongothers.
• Installed state-of-the-art machinery equipped withcompact yarn technology in the spinning section foruniform and improved yarn quality.
• Installed new, sophisticated auto-doffers in the spinningsection, improving productivity.
• Installed the yarn package dye machine in the laboratory,reducing cycle time for customised samples as per clientrequirements.
• Developed two new UK clients and received an order for3,00,000 mtrs.
• Added two more reputed domestic clients – Spykar andBelmonte – catering to the niche textile segments.
• Added one more buying house for the new segment (NextImpulse) to leverage the expanding ladies wear segment.
• Developed various furnishing fabrics, upholstery fabrics,curtain fabrics and carpets.
• Introduced customised stitch cut pieces and small metrelengths for the semi-urban and rural markets.
Operational performance 2008-09During 2008-09, the Indian textile industry was adverselyimpacted for various reasons:
• In the first half of 2008-09, the appreciating rupeesignificantly dampened profitability on fabric and garmentexports.
• In the second half of 2008-09, the global economic crisiswith its epicentre in the developed economies of the USand EU led to a considerable demand destruction.
The flexibility in the business model enabled it to avoidadversity. In the first half, the focus was skewed towards thedomestic market, which was shifted to the global arena withthe depreciation of the rupee in the second half. For the fullyear, export accounted for 5.72% of the total sales of textileas against 6.15% in 2007-08.
Despite this, the textile division grew 6.46% – from
Rs. 351.67 crore in 2007-08 to Rs. 374.42 crore in 2008-09.Average realisation increased 4.42 % from Rs. 129.43 per mtrin 2007-08 to Rs. 135.14 per mtr in 2008-09, reflectingenhanced focus on value-added varieties. As opposed to theconventional practice, the Company sourced more than 95%of its cotton requirement from the domestic market –resulting in sizeable saving for the division.
Road aheadGoing ahead, the Company has drawn out a strategicblueprint for sustaining its growth and growing profitabilityover the coming years:
• Commission the expansion project to increase the fabricmanufacturing capacity to 29 mn mtrs.
• Establish a strong presence in the high-value technicaltextiles and furnishing segments.
• Strengthen its presence in the semi-urban and ruralmarkets through its ready-to-stitch packages.
• Establish a stronger presence in new geographies namelyAustralia, South Africa and Germany. As a first step in thisdirection, the Company is in the process of tying up withan Australian buyer-cum-designer to market theCompany’s products in the attractive Australian market.
Risk and concernsAt the core of the Company’s risk-mitigating initiatives, thereis a comprehensive and integrated risk managementframework, which comprises prudent norms, structuredreporting and control. The risk management approachconforms to the Company’s strategic direction, in line withshareholders’ desired total returns, the Company’s credit-ratings and its desired risk appetite.
Human resourcesSintex encourages a continuous learning environment,promoting meritocracy. During the year under review, theCompany’s employee strength touched 3,427 people. TheCompany was actively engaged in imparting functional andattitudinal training to employees for maximum productivity;other initiatives comprised a regularised recruitment processas well as a fair and unbiased performance appraisal systemwith an inbuilt feedback system. During the year underreview, the Company created a compensation structure thatprovided members with tangible and intangible benefits.
Internal controls and proceduresAt Sintex, stringent internal control systems and procedureschecked the unauthorised use of products, ensuring optimalresource utilisation. The Company conducted regular andextensive checks at every stage of its production and dispatchcycle to ensure strict operational and quality compliance. AnAudit Committee, headed by a Non-Executive IndependentDirector, periodically reviewed audit observations.
31Annual Report 2008-09
Auditor’s Report
1. We have audited the attached Balance Sheet of SintexIndustries Limited as at March 31, 2009, the Profit andLoss Account and also the Cash Flow Statement for theyear ended on that date annexed thereto. These financialstatements are the responsibility of the Company’smanagement. Our responsibility is to express an opinion onthese financial statements based on our audit.
2. We conducted our audit in accordance with AuditingStandards generally accepted in India. Those Standardsrequire that we plan and perform the audit to obtainreasonable assurance about whether the financialstatements are free of material misstatement. An auditincludes examining, on a test basis, evidence supportingthe amounts and disclosures in the financial statements. Anaudit also includes assessing the accounting principles usedand significant estimates made by the management, aswell as evaluating the overall financial statementpresentation. We believe that our audit provides areasonable basis for our opinion.
3. Without qualifying our opinion, we draw attention to Note4 of Schedule 20 to these financial statements, regardingthe Scheme of Arrangement (the “Scheme”) approved bythe Honourable High Court of Gujarat, as per whichScheme, the Company has earmarked Rs. 200 crore fromSecurities Premium Reserve to International BusinessDevelopment Reserve Account (the “IBDR”) and hasadjusted against the earmarked balance of IBDR, Rs. 130.73 crore being expenses of the nature as specifiedunder the Scheme. The said accounting treatment has beenfollowed as prescribed under the Scheme. The relevantIndian Generally Accepted Accounting Principles, inabsence of such Scheme, would not permit the adjustmentof expenses against the Securities Premium Reserve / IBDR.Had the Company accounted for these expenses as perGenerally Accepted Accounting Principles in India, insteadof accounting for as per the Scheme, the balance ofSecurities Premium Reserve / IBDR would have been higherand Profit after tax would have been lower by Rs. 130.73crore.
4. As required by the Companies (Auditor’s Report) Order,2003 (the “Order”) issued by the Central Government ofIndia in terms of sub-section (4A) of Section 227 of theCompanies Act, 1956, we enclose in the Annexure astatement on the matters specified in paragraphs 4 and 5of the said Order.
5. Further to our comments in the Annexure referred to
above, we report that:
i) we have obtained all the information and explanationswhich to the best of our knowledge and belief werenecessary for the purposes of our audit;
ii) in our opinion, proper books of account as required bylaw have been kept by the Company so far as appearsfrom our examinations of those books;
iii) the Balance Sheet, Profit and Loss Account and CashFlow Statement dealt with by this report are inagreement with the books of account;
iv) in our opinion, the Balance Sheet, Profit and LossAccount and Cash Flow Statement dealt with by thisreport comply with the Accounting Standards referredto in sub-section (3C) of Section 211 of the CompaniesAct, 1956;
v) on the basis of written representations received fromthe directors as on March 31, 2009 and taken onrecord by the Board of Directors, we report that noneof the directors is disqualified as on March 31, 2009from being appointed as a director in terms of clause(g) of sub-section (1) of Section 274 of the CompaniesAct, 1956;
vi) in our opinion and to the best of our information andaccording to the explanations given to us, the saidaccounts read with notes thereon give the informationrequired by the Companies Act, 1956, in the manner sorequired and give a true and fair view in conformitywith the accounting principles generally accepted inIndia:
a) in the case of the Balance Sheet, of the state of theaffairs of the Company as at March 31, 2009;
b) in the case of the Profit and Loss Account, of theprofit for the year ended on that date; and
c) in the case of the Cash Flow Statement, of the cashflows for the year ended on that date.
For Deloitte Haskins & SellsChartered Accountants
Gaurav J. ShahAhmedabad PartnerDate: May 9, 2009 Membership No. 35701
To the Members of Sintex Industries Limited
32 Sintex Industries Limited
Annexure to the Auditor’s Report
i. The nature of the Company’s activities during the year
have been such that clauses (xiii) and (xiv) of paragraph 4
of the Companies (Auditor’s Report) Order, 2003 are not
applicable to the Company for the year.
ii. a) The Company has maintained proper records showing
full particulars, including quantitative details and
situation of its fixed assets.
b) As explained to us, all the fixed assets have been
physically verified by the management in a phased
manner over a period of three years, which in our
opinion is reasonable, having regard to the size of the
Company and nature of its assets. According to the
information and explanations given to us, no material
discrepancies were noticed by the management on
such verification.
c) The Company has not disposed off a substantial part
of fixed assets during the year and the going concern
status of the Company is not affected.
iii. a) Physical verification of inventory has been conducted
during the year by the management at reasonable
intervals. In our opinion, the frequency of verification
is reasonable.
b) In our opinion and according to the information and
explanations given to us, the procedures of physical
verification of inventory followed by the management
are reasonable and adequate in relation to the size of
the Company and nature of its business.
c) The Company is maintaining proper records of
inventory. As explained to us, there was no material
discrepancies noticed on physical verification of
inventory as compared to the book records.
iv. The Company has neither granted nor taken any loans
secured/ unsecured to or from companies, firms or other
parties covered in the register maintained under section
301 of the Companies Act, 1956.
v. In our opinion and according to the information and
explanations given to us, there are adequate internal
control procedures commensurate with the size of the
Company and the nature of its business for the purchase
of inventory and fixed assets and for the sale of goods
and services. During the course of our audit, we have not
observed any continuing failure to correct major
weaknesses in internal control systems.
vi. a) In our opinion and according to the information and
explanations given to us, transactions that needed to
be entered into the register maintained in pursuance
of Section 301 of the Companies Act, 1956 have been
so entered.
b) In our opinion and according to the information and
explanations given to us, the transactions made in
pursuance of such contracts or arrangements entered
in the register maintained under section 301 of the
Companies Act, 1956 and exceeding the value of
rupees five lacs in respect of such parties during the
year, have been made at prices, which are reasonable
having regard to the prevailing market prices at the
relevant time.
vii. The Company has not accepted deposits from the public
within the meaning of Section 58A and 58AA or any
other relevant provisions of the Companies Act, 1956 and
the Rules framed there under.
viii. Internal audit of the Company is carried out by a firm of
Chartered Accountants. On the basis of the reports
submitted by them to the management, in our opinion,
the Internal Audit System is commensurate with the size
of the Company and nature of its business.
ix. We have broadly reviewed the books of account of the
textile division relating to materials, labour and other
items of cost maintained by the Company pursuant to the
Rules made by the Central Government for the
maintenance of cost records under section 209 (1) (d) of
the Companies Act, 1956 and we are of the opinion that
(Referred to in paragraph 4 of our report of even date)
33Annual Report 2008-09
prima facie the prescribed accounts and records have
been made and maintained.
x. According to the information and explanations given to
us in respect of statutory and other dues:
a) The Company has been generally regular in depositing
with appropriate authorities undisputed statutory
dues including Provident Fund, Investor Education
and Protection Fund, Sales-tax, Customs Duty, Excise
Duty, Income-tax, Wealth-tax, Service-tax, Cess and
other material statutory dues applicable to it.
b) According to the information and explanations given
to us, no undisputed amounts payable in respect of
Income-tax, Sales-tax, Wealth-tax, Service-tax,
Customs Duty and Excise Duty were in arrears as at
March 31, 2009 for a period of more than six months
from the date they became payable.
c) According to the information and explanations given
to us, there are no dues of Sales-tax, Excise Duty,
xi. The Company has no accumulated losses at the end of
the financial year and it has not incurred cash losses in the
financial year under report and the immediately
preceding financial year.
xii. Based on our audit procedures and according to the
information and explanations given to us, we are of the
opinion that the Company has not defaulted in
repayment of dues to financial institutions, banks or
debenture holders.
xiii. According to the information and explanations given to
us, the Company has not given any loans and advances
on the basis of security by way of pledge of shares,
debentures and other securities.
xiv. The Company has given guarantees for loans taken by
others from banks. According to the information and
explanations given to us, we are of the opinion that the
terms and conditions thereof are not prima facie
prejudicial to the interest of the Company.
xv. According to the information and explanations given to
us, the term loans have been applied for the purpose for
which they were raised other than amount temporarily
invested pending utilisation of the funds for the intended
use.
xvi. According to the information and explanations given to
us and on an overall examination of the Balance Sheet of
the Company, we report that funds raised on short term
basis have, prima facie, not been used during the year for
long term investment.
xvii. According to the information and explanations given to
us, the Company has not made preferential allotment of
shares to parties and companies covered in the register
maintained under section 301 of the Companies Act,
1956.
xviii. According to the information and explanations given to
us and as per the records examined by us, securities and
charges have been created in respect of secured
debentures issued by the Company.
xix. During the year, the Company has not raised any money
by public issue.
xx. According to the information and explanations given to
us, no fraud on or by the Company has been noticed or
reported during the year.
For Deloitte Haskins & Sells
Chartered Accountants
(Gaurav J. Shah)
Ahmedabad Partner
Date: May 9, 2009 Membership No. 35701
56 Sintex Industries Limited
Section 212STATEMENT PURSUANT TO SECTION 212(8) OF THE COMPANIES ACT, 1956 RELATING TO SUBSIDIARY COMPANIES
Rahul A. Patel Managing Director Ramnikbhai H. Ambani Director
Amit D. Patel Managing Director Ashwin Lalbhai Shah Director
S. B. Dangayach Managing Director Dr. Rajesh B. Parikh Director
Dr. Lavkumar Kantilal Director
Rooshikumar V. Pandya Director
Indira J. Parikh Director
Ahmedabad L. M. Rathod
Date : May 9, 2009 Company Secretary
Sr. Name of Subsidiary Reporting Capital Reserves Total Total Investments Turnover Profit Provision Profit ProposedNo. Company period Assets Liabilities other than Before for after Dividend
investment in Taxation Taxation Taxationsubsidiaries
Auditor’s Report on Consolidated Financial Statement
1. We have audited the attached Consolidated Balance Sheetof Sintex Industries Limited (“the Company”) and itssubsidiaries (collectively referred to as “the Group”), as atMarch 31, 2009 and also the Consolidated Profit and LossAccount and the Consolidated Cash Flow Statement for theyear ended on that date, annexed thereto. These financialstatements are the responsibility of the Company’smanagement and have been prepared by the managementon the basis of separate financial statements and otherfinancial information of the entities of the Group. Ourresponsibility is to express an opinion on these financialstatements based on our audit.
2. We conducted our audit in accordance with the auditingstandards generally accepted in India. Those Standardsrequire that we plan and perform the audit to obtainreasonable assurance about whether the financialstatements are free of material misstatement. An auditincludes examining, on a test basis, evidence supportingthe amounts and disclosures in the financial statements. Anaudit also includes assessing the accounting principles usedand significant estimates made by the management, aswell as evaluating the overall financial statementspresentation. We believe that our audit provides areasonable basis for our opinion.
3. Without qualifying our opinion, we draw attention to Note4 of Schedule 20 to these financial statements, regardingthe Scheme of Arrangement (the “Scheme”) approved bythe Honourable High Court of Gujarat, as per whichScheme, the Company has earmarked Rs. 200 crore fromSecurities Premium Reserve to International BusinessDevelopment Reserve Account (the “IBDR”) and hasadjusted against the earmarked balance of IBDR, Rs. 130.73 crore being expenses of the nature as specifiedunder the Scheme. The said accounting treatment has beenfollowed as prescribed under the Scheme. The relevantIndian Generally Accepted Accounting Principles, inabsence of such Scheme, would not permit the adjustmentof expenses against the Securities Premium Reserve / IBDR.Had the Company accounted for these expenses as perGenerally Accepted Accounting Principles in India, insteadof accounting for them as per the Scheme, the balance ofSecurities Premium Reserve / IBDR would have been higherand Profit after tax would have been lower by Rs. 130.73crore.
4. We did not audit the financial statements of threesubsidiaries, whose financial statements/ consolidatedfinancial statements reflect total assets of Rs. 707.87 croreas at March 31, 2009, total revenue of Rs. 1003.91 croreand cash outflows amounting to Rs. 1.72 crore for the yearended on that date as considered in the Consolidated
Financial Statements. These financial statements and otherfinancial information have been audited by other auditorswhose reports have been furnished to us, and our opinion,in so far as it relates to the amount included in respect ofthese subsidiaries, is based solely on the reports of suchother auditors.
5. We have relied on the unaudited financial statements ofthree subsidiaries, whose financial statements reflect totalassets of Rs. 90.39 crore as at March 31, 2009, totalrevenue of Rs. 0.38 crore and cash inflows amounting to Rs. 41.22 crore for the year ended on that date asconsidered in the Consolidated Financial Statements. Theseunaudited financial statements have been compiled andcertified by the management and have not been subject toaudit by independent auditors. Our opinion, in so far as itrelates to the amounts included in respect of the subsidiaryis based solely on these financial statements certified by themanagement.
6. We report that the consolidated financial statements havebeen prepared by the Company’s management inaccordance with the requirements of Accounting Standard(AS) 21, “Consolidated Financial Statements” issued by theInstitute of Chartered Accountants of India.
7. Based on our audit as aforesaid and on consideration ofreports of other auditors on the separate financialstatements and on the other financial information of thecomponents and accounts certified by the management asexplained in paragraph 5 above and to the best of ourinformation and according to the explanations given to us,we are of the opinion that the attached ConsolidatedFinancial Statements give a true and fair view in conformitywith the accounting principles generally accepted in India:
a) in the case of the Consolidated Balance Sheet, of theconsolidated state of affairs of the Group as at March31, 2009;
b) in the case of the Consolidated Profit and Loss Account,of the profit of the Group for the year ended on thatdate; and
c) in the case of the Consolidated Cash Flow Statement, ofthe cash flows of the Group for the year ended on thatdate.
For Deloitte Haskins & SellsChartered Accountants
Gaurav J. ShahAhmedabad PartnerDate: May 9, 2009 Membership No. 35701
To the Board of Directors,Sintex Industries Limited
58 Sintex Industries Limited
Consolidated Balance Sheet As at March 31, 2009
As at Schedules 31.03.2009 31.03.2008SOURCES OF FUNDSShareholders’ FundsShare Capital 1 27.10 27.10Convertible Share Warrants – 47.80Reserves & Surplus 2 1,677.82 1,464.28
2,722.58 2,628.72Less: Current Liabilities & Provisions 11 934.76 1,004.58Net Current Assets 1,787.82 1,624.14Miscellaneous Expenditure(To the extent not written off or adjusted) 12 0.21 1.15Total 4,200.79 3,604.87Significant Accounting Policies 19Notes on Accounts 20
(Rs. in crore)
As per our attached Rahul A. Patel Managing Director Ramnikbhai H. Ambani Directorreport of even date Amit D. Patel Managing Director Ashwin Lalbhai Shah Director
S. B. Dangayach Managing Director Dr. Rajesh B. Parikh DirectorFor Deloitte Haskins & Sells Dr. Lavkumar Kantilal DirectorChartered Accountants Rooshikumar V. Pandya Director
Indira J. Parikh DirectorGaurav J. ShahPartnerMembership No. 35701 L. M. Rathod
Company Secretary
Ahmedabad AhmedabadDate : May 9, 2009 Date : May 9, 2009
59Annual Report 2008-09
Consolidated Profit and Loss Account For the year ended March 31, 2009
For the year ended Schedules 31.03.2009 31.03.2008
INCOMEGross Sales 3,200.61 2,438.67Less: Excise Duty and Sales Tax 136.73 164.44Net Sales 3,063.88 2,274.23Other Income 13 156.30 60.07Increase/(Decrease) in Stock of Finished and Process Stock 14 36.87 21.52
3,257.05 2,355.82EXPENDITURERaw Materials Consumed 15 1,652.02 1,321.56Employees' Emoluments 16 414.23 209.09Manufacturing and Other Expenses 17 584.48 382.40Interest and Finance Charges 18 81.95 64.32Depreciation and Amortisation 114.39 76.51
2,847.07 2,053.88Profit before Tax 409.98 301.94Provision for Taxation
Excess/(Short) Provision for Taxation in earlier years (Net) (2.39) –Profit after Tax before Minority Interest 327.37 232.18Less: Minority Interest 2.25 1.86Profit after Tax 325.12 230.32Balance brought forward from previous year 470.82 282.60Profit available for Appropriations 795.94 512.92APPROPRIATIONSProposed Dividend - Equity Shares 15.09 13.73Tax on Dividend 2.56 2.37General Reserve 31.00 26.00Debenture Redemption Reserve 1.17 –Balance carried to Balance Sheet 746.12 470.82Total 795.94 512.92Earnings per share (Refer Note 13 of Schedule 20)Basic (in Rs.) 24.00 19.54Diluted (in Rs.) 24.00 19.54Significant Accounting Policies 19Notes on Accounts 20
As per our attached Rahul A. Patel Managing Director Ramnikbhai H. Ambani Directorreport of even date Amit D. Patel Managing Director Ashwin Lalbhai Shah Director
S. B. Dangayach Managing Director Dr. Rajesh B. Parikh DirectorFor Deloitte Haskins & Sells Dr. Lavkumar Kantilal DirectorChartered Accountants Rooshikumar V. Pandya Director
Indira J. Parikh DirectorGaurav J. ShahPartnerMembership No. 35701 L. M. Rathod
Company Secretary
Ahmedabad AhmedabadDate : May 9, 2009 Date : May 9, 2009
(Rs. in crore)
60 Sintex Industries Limited
Consolidated Cash Flow Statement For the year ended March 31, 2009
For the year ended 31.03.2009 31.03.2008
A. CASH FLOW FROM OPERATING ACTIVITIES
Net Profit before Tax 409.98 301.94
Adjustments for :
Profit on Sale of Fixed Assets & Investments (19.39) (13.35)
Expenses relating to FCCBs / Debenture Issue (11.64) –
Interest and Financial Charges 81.95 64.32
Provision for Doubtful Debts and Advances 1.63 0.94
Bad debt written off 0.24 –
Employees Compensation Expenses 9.27 2.73
Dividend Income (1.80) (1.84)
Miscellaneous Expenditure written off 1.06 1.05
157.43 136.78
Operating Profit before Working Capital Changes 567.41 438.72
Adjustments for :
Trade & Other receivables (238.36) (655.70)
Inventories (74.88) (151.64)
Trade Payables (38.19) 469.05
(351.43) (338.29)
Cash generated from operations 215.98 100.43
Direct Taxes (Paid) / Refund (Net) (68.35) (41.82)
Net Cash from Operating Activities - (A) 147.63 58.61
B. CASH FLOW FROM INVESTING ACTIVITIES
Purchase of Fixed Assets (654.02) (940.62)
Sale of Fixed Assets 3.70 1.66
Investment in Subsidiary and others including Share Application Money (8.69) (51.27)
Sale of Long Term Investment – 3.23
Expenses adjusted in IBDR (130.73) –
Interest Received 64.51 14.02
Dividend Received 1.80 1.84
Net Cash used in Investing Activities - (B) (723.43) (971.14)
(Rs. in crore)
61Annual Report 2008-09
Cash Flow Statement (Contd..)
As per our attached Rahul A. Patel Managing Director Ramnikbhai H. Ambani Directorreport of even date Amit D. Patel Managing Director Ashwin Lalbhai Shah Director
S. B. Dangayach Managing Director Dr. Rajesh B. Parikh DirectorFor Deloitte Haskins & Sells Dr. Lavkumar Kantilal DirectorChartered Accountants Rooshikumar V. Pandya Director
Indira J. Parikh DirectorGaurav J. ShahPartnerMembership No. 35701 L. M. Rathod
Company Secretary
Ahmedabad AhmedabadDate : May 9, 2009 Date : May 9, 2009
2 The Cash Flow Statement has been prepared under the "Indirect Method" as set out in Accounting Standard-3 on Cash FlowStatements issued by the Institute of Chartered Accountants of India.
3 The previous year's figures have been regrouped wherever necessary to make them comparable with this year's figures.
For the year ended 31.03.2009 31.03.2008
C. CASH FLOW FROM FINANCING ACTIVITIES
Proceeds from Borrowings:
From Term Borrowings 442.53 562.83
From FCCB – 885.21
From Unsecured 9.68 –
Interest Paid (99.28) (92.21)
Repayment of Borrowings (331.49) (54.52)
Increase in Deferred Revenue Expenditure (0.01) –
Proceeds from Equity Share Capital/Warrants (including Premium) – 759.53
Dividend Paid (16.02) (12.61)
Net Cash used in Financing Activities - (C) 5.41 2048.23
Net Changes in Cash & Cash Equivalents (A+B+C) (570.39) 1,135.70
in Fixed Deposit [Including Rs. 831.85 crore (previous year 1039.59 1217.73
Rs. 894.64 crore) unutilised amount of FCCB issue]
[Out of above Rs. 157.44 crore (previous year Nil)
under lien to banks]
1168.29 1371.07
Short Term Investments 170.11 322.13
Cash and Cash Equivalents 1338.61 1693.38
Effect of Foreign Exchange Rate Changes (194.59) 21.03
Cash and Cash equivalents as restated 1144.02 1714.41
62 Sintex Industries Limited
Schedules forming part of the Consolidated Balance Sheet
As at 31.03.2009 31.03.2008
Schedule - 1 SHARE CAPITALAuthorised25,00,00,000 (previous year 25,00,00,000) Equity Shares of Rs. 2/- each 50.00 50.00
15,00,000 (previous year 15,00,000) Preference Shares of Rs. 100/- each 15.00 15.00Total 65.00 65.00Issued13,65,11,333 (previous year 13,65,11,333) Equity Shares of Rs. 2/- each 27.30 27.30Total 27.30 27.30Subscribed & Paid Up13,64,95,433 (previous year 13,64,95,433) Equity Shares of Rs. 2/- each 27.30 27.30Less: Amount recoverable from ESOP Trust (face value of Equity Shares allotted to the Trust) 0.20 0.20Total 27.10 27.10
Notes:Of the above Shares:i) 1,25,000 Equity Shares were issued as fully paid-up pursuant to contract without payment being received in cash.ii) 74,55,650 Equity Shares were allotted as fully paid-up Bonus Shares by capitalising General Reserve, Securities Premium Reserve and Capital Reserve.iii) 40,16,370 Equity Shares were allotted on April 15, 1993 as fully paid-up pursuant to conversion of 16.5% Partly Convertible Debentures.
(Rs. in crore)
Schedule - 2 RESERVES AND SURPLUSCapital ReserveBalance as per last Balance Sheet – –Add: Forfeiture of upfront amount of Convertible Share Warrants (Refer Note 5 of Schedule 20) 47.80 –
47.80 –Securities Premium ReserveBalance as per last Balance Sheet 885.12 280.14Add: On shares issued upon exercise of conversion of Warrants, under QIP issue
and conversion of FCCBs – 896.11Add: On shares issued to ESOP Trust 36.01 36.01Less: Expenses relating to FCCBs/Debenture issue 11.64 27.96Less: Premium payable on redemption of outstanding FCCBs – 263.17Less: Amount recoverable from ESOP Trust (Premium on equity shares allotted to the Trust) 36.01 36.01Less: Transferred during the year to International Business Development
Capital Redemption ReserveBalance as per last Balance Sheet 15.05 15.05Debenture Redemption ReserveBalance as per last Balance Sheet 1.32 2.07Add: Transferred from Profit and Loss Account 1.17 –Less: Transferred to General Reserve 0.75 0.75
1.74 1.32International Business Development Reserve Account ("IBDR") (Refer Note 4 of Schedule 20)Transferred during the year from SecuritiesPremium Reserve 200.00 –Less: Adjusted against investment in a subsidiary 130.73 –
69.27 –General ReserveBalance as per last Balance Sheet 77.72 50.92Add: Transferred from Debenture Redemption Reserve 0.75 0.75Add: Transferred from the Profit and Loss Account 31.00 26.00Less: Adjustment for provision for employee benefits net of deferred tax – 0.05
109.47 77.72Employees Stock Option OutstandingBalance as per last Balance Sheet 2.73 –Add: Amortisation during the year for Employee Compensation Expenses 9.27 2.73
12.00 2.73Foreign Currency Translation Reserve 2.89 11.52Balance of the Profit and Loss Account 746.12 470.82Total 1,677.82 1,464.28
63Annual Report 2008-09
Schedules forming part of the Consolidated Balance Sheet
As at Note 31.03.2009 31.03.2008
Schedule - 3 SECURED LOANS
A. Debentures 252.25 5.25B. From Banks:
a) Cash Credit Accountsin Rupees 51.43 184.36
b) Term Loansin Rupees 1 508.49 524.21in Foreign Currency 170.14 193.62
C. From Financial InstitutionsTerm Loansa) in Rupees 1 62.86 19.29b) in Foreign Currency 6.56 10.30
D. From Others 0.92 1.13Total 1,052.65 938.16
Note:1) Out of above loans, amount payable within 12 months is Rs. 84.84 crore (previous year Rs. 89.44 crore).
(Rs. in crore)
Schedule - 4 UNSECURED LOANS
Zero Coupon Foreign Currency Convertible Bonds 1,146.38 898.85From Companies 2.04 7.96From Banks 73.11 58.28From Others 22.24 23.01Total 1,243.77 988.10Note: Out of above loans, amount payable within 12 months is Rs. Nil (previous year Rs. Nil).
Schedule - 5 FIXED ASSETSGROSS BLOCK (AT COST) DEPRECIATION AND AMORTISATION NET BLOCK
Particulars As at Acquired on Additions On Sales / As at Upto Acquired on For the On Sales / Upto As at As at01.04.2008 Acquisition Adjustments 31.03.2009 01.04.2008 Acquisition year Adjustments 31.03.2009 31.03.2009 31.03.2008
Notes:1) Cost of land includes Rs. 0.07 crore for land held in a co-operative society at Daman. The Company holds 3 Shares of aggregate face value of
Rs. 3000/- in the co-operative society as per the bye-laws of the society.2) Addition to Fixed Assets includes capitalisation of borrowing costs pertaining to qualifying assets of Rs. 21.42 crore (previous year Rs. 24.29 crore).3) Addition to Fixed Assets during the year includes Rs. 2.98 crore for adjustment on account of Foreign Subsidiary Currency Realignment.4) Relates to Fixed Assets of new subsidiaries.5) Relates to Accumulated Depreciation of new subsidiaries.
64 Sintex Industries Limited
Schedules forming part of the Consolidated Balance Sheet(Rs. in crore)
Schedule - 6 INVESTMENTS (AT COST)
Face Value As at 31.03.2009 As at 31.03.2008Rs. Nos./Units Amount Nos./Units Amount
i) Long Term InvestmentsNon-Trade , QuotedIn Equity Shares (Fully paid up)Dena Bank 10 30,200 0.09 30,200 0.09Trade, UnquotedIn others :Sintex International Ltd. 10 900,000 3.00 900,000 3.00BVM Finance Pvt. Ltd. 10 1738000 8.69 0.00 0.00
ii) Current InvestmentsNon-Trade, UnquotedMutual funds
ABN Amro Intrval Fund 10 - - 9881786 10.09AIG India Treasury Plus 10 - - 10310705 10.32AIG Short Term Fund Insti. Growth 1000 - - 250274 25.06Birla Sunlife Iiquid Plus Insti. Growth 10 - - 19867176 30.08DBS Chola freedom income STP 10 - - 229137 0.25DWS Money Plus Fund Growth 10 - - 17986371 20.08HDFC FMP 90 D (Jan.,08) 10 - - 10214400 10.21HDFC Short Term Plan 10 - - 3655559 5.15ICICI Prudential Flexible Income 10 - - 23658747 25.02ICICI Prudential Flexible Income Growth 10 - - 16865454 25.00ICICI Prudential interval Fund II Qrtly. 10 - - 10000000 10.00ING Liquid Plus Fund Insti. Growth 10 - - 18588368 20.03ING Vyasya F.M. Fund Sr. 22 10 - - 20650776 20.65Kotak Flexi Debt Scheme Growth 10 - - 19915875 25.00Principal Income Fund 1000 - - 1151298 0.00Principal Liquid Plus Fund Growth 10 - - 19547802 20.08Reliance Monthly Interval Fund 10 - - 25005139 25.02SBI Debt Fund 30D Growth 10 - - 10059608 10.06Templeton Short Term Plan 1000 - - 86043 10.00UTI Liquid Plus Fund Insti. Growth 1000 - - 186541 20.03Birla Sunlife Short Term Fund Growth 10 6183427 6.26 - -Birla Sunlife Short Term Fund-Retail-Growth 10 605784 0.94 - -DWS Fixed Term Fund Series 49Regular Growth 10 20327837 20.33 - -ICICI Prudential flexible Income Growth 10 18553739 30.05 - -Kotak Flexi Debt Scheme Institutional Growth 10 15717269 16.71 - -Reliance Medium Term Fund Growth 10 5613982 10.14 - -SBI SHF Ultra Short Term FundInstitutional Plan 10 8730117 10.00 - -UTI Treasury Advantage Fund-Institutional Plan 1100 171715 20.08 - -DSP Black Rock Fund Managers Limited- PMS 1000000 300 30.00 - -ADG Absolute Diversified GrowthFund Limited USD 100 50,000 25.60TOTAL 181.89 325.22
Quoted Investments Cost 0.09 0.09Market Value 0.10 0.15
Schedule - 8 SUNDRY DEBTORS (Unsecured)Considered Good 809.39 793.76Considered Doubtful 7.65 4.14Less : Provision for Doubtful Debts 7.65 4.14
– –Total 809.39 793.76
Schedule - 9 CASH AND BANK BALANCESCash on hand [including cheques on hand and remittances in transit Rs. Nil crore 0.21 0.18(Previous year Rs. 0.02 crore)]With Banks :
in Current Accounts 128.70 153.34in Fixed Deposits 1,039.59 1,217.73[including Rs. 831.85 crore (previous year Rs. 894.64 crore) unutilised amount of FCCB issue]
1,168.29 1,371.07(Out of above, Fixed Deposits of Rs.157.44 crore (previous year Nil) under lien to banks)
Total 1,168.50 1,371.25
Schedule - 10 LOANS AND ADVANCES
(Unsecured, considered good except stated otherwise)Advances recoverable in cash or in kind or for value to be received 330.47 159.88Loan to Employee Welfare Trust 4.09 –Advance Payment of Tax and Tax Deducted at Source (Net of Provision) 32.11 –Balance with Central Excise Department 0.92 1.61
367.59 161.49Considered Doubtful 0.11 0.11Less : Provision for doubtful loans and Advances 0.11 – 0.11Total 367.59 161.49
66 Sintex Industries Limited
Schedules forming part of the Consolidated Balance Sheet
As at 31.03.2009 31.03.2008
Schedule - 11 CURRENT LIABILITIES AND PROVISIONSA. Current Liabilities
Acceptances 51.76 213.63Sundry Creditors- Due to Micro and Small Enterprises 0.93 2.56- Others 493.85 366.30Investor Education and Protection Fund- Unclaimed Dividend 0.31 0.29- Unclaimed Debenture Installment & Interest 0.18 0.37(These do not include any amounts due and outstanding to be credited to"Investor Education and Protection Fund")Other Current Liabilities 10.00 20.00Interest accrued but not due 9.45 5.35
566.48 608.50B. Provisions
Provision for Leave Salary 5.51 4.76Provision for Gratuity 5.72 4.88Other Provisions 76.23 105.04Premium payable on redemption of outstanding FCCBs 263.17 263.17Provision for Taxation (Net of Advance Tax and TDS) – 2.13Proposed Dividend 15.09 13.73Tax on Dividend 2.56 2.37
368.28 396.08Total 934.76 1,004.58
(Rs. in crore)
Schedule - 12 MISCELLANEOUS EXPENDITURE(To the extent not written off or adjusted)Shares Issue ExpensesOpening Balance 1.15 2.12Add: Incurred during the year 0.12 0.08
Schedules forming part of the Consolidated Profit and Loss Account(Rs. in crore)
For the year ended 31.03.2009 31.03.2008
Schedule - 13 OTHER INCOMEInterest (Gross)* 64.51 14.02Dividend 1.80 1.84Rent 0.77 4.15Profit on Sale of Fixed Assets (Net) 0.17 0.79Profit on Sale of Investments (Net) 19.22 12.56Excess Provision for Expenses of earlier years written back 1.33 7.74Provision for Doubtful Debts written back – 0.49Foreign Exchange Gain – 9.73Miscellaneous Income 68.50 8.75*Note: Tax deducted at source from Interest Rs. 6.32 crore (previous year Rs. 2.71 crore)Total 156.30 60.07
26.27 15.28Excise Duty provided on stocks (1.01) (1.22)Insurance 8.18 6.03Rates & Taxes 18.02 9.09Stationery, Printing, Postage, Telegram and Advertisement etc. 20.46 15.94Directors' Fees and Travelling Expenses 0.50 2.81[including Rs. 0.46 crore (Previous year Rs. 0.52 crore) for travelling andhalting allowances]Audit Fees 0.49 0.26Commission and Brokerage on Sales 31.82 24.85General Charges 157.09 102.13Charity & Donation 0.08 0.07Foreign Exchange Loss 28.41 –Provision for Doubtful Debts and Advances 1.63 0.94Bad Debt Written off 0.24 –Misc. Expenditure Written off 1.06 1.05Total 584.48 382.40
(Rs. in crore)
2. The above mentioned fees paid to auditors in other capacities is excluding Rs. 0.50 crore (previous year Rs. 1.12 crore) paid for certificationwork required to be done by the Statutory Auditors for the purpose of QIP & FCCB issues and adjusted against Securities Premium Reserve.
2008-09 2007-08
Notes:
1. General Charges includesa) Payments to Auditors in other capacity :
i) To affiliated firms 0.38 0.09ii) For other services (including certification etc.) 0.04 0.10iii) For certification work required to be done by the statutory auditors 0.02 0.02iv) For Expenses 0.03 0.01Total 0.47 0.22
b) Cost Auditor Audit fees 0.01 0.01Total 0.01 0.01
69Annual Report 2008-09
Schedules forming part of the Consolidated AccountSchedule - 19 SIGNIFICANT ACCOUNTING POLICIES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Contd..)1) Principles of Consolidation:
The consolidated financial statements relate to Sintex Industries Limited ("the Company") and its subsidiary companies. The consolidatedfinancial statements have been prepared on the following basis:a) The financial statements of the Company and its subsidiary companies are combined on a line-by-line basis by adding together the book
value of like items of assets, liabilities, income and expenses, after fully eliminating intra-group balances and intra-group transactionsresulting in unrealised profits or losses in accordance with Accounting Standard-21 - "Consolidated Financial Statements" issued by theInstitute of Chartered Accountants of India.
b) The operations of foreign subsidiaries are not considered as an integral part of the operations of the parent. Hence all revenue items areconsolidated at the average rate prevailing during the year. All assets and liabilities are converted at the rates prevailing at the end of theyear. Any exchange difference arising on consolidation is recognised in the "Foreign Currency Translation Reserve".
c) The difference between the cost of investment in the subsidiaries, over the net assets at the time of acquisition of shares in the subsidiariesis recognised in the financial statements as Goodwill or Capital Reserve as the case may be.
d) Minority Interest's share of net profit of consolidated subsidiaries for the year is identified and adjusted against the income of the groupin order to arrive at the net income attributable to shareholders of the Company.
e) Minority Interest's share of net assets of consolidated subsidiaries is identified and presented in the Consolidated Balance Sheet separatefrom liabilities and the equity of the Company's shareholders.
f) As far as possible, the Consolidated Financial Statements are prepared using uniform accounting policies for like transactions and otherevents in similar circumstances and are presented in the same manner as the Company's separate Financial Statements.
g) Investments made by the parent company in subsidiary companies subsequent to the holding-subsidiary relationship coming into existenceare eliminated while preparing the Consolidated Financial Statement.
h) Intragroup balances and intragroup transactions are eliminated to the extent of share of the parent company in full.i) Unrealised profits on account of intragroup transactions have been accounted for depending upon whether the transaction is an upstream
or a downstream transaction.
2) Investments other than in subsidiaries are accounted as per Accounting Standard (AS) 13 on “Accounting for Investments".
3) Other significant accounting policies:These are set out under "Significant Accounting Policies" as given in the Unconsolidated Financial Statements of Sintex Industries Limited.
1) The subsidiary companies considered in the Consolidated Financial Statements are:
Schedule - 20 NOTES FORMING PART OF THE CONSOLIDATED ACCOUNTS
Country of Effective ownership in incorporation subsidiaries as at
Name of Subsidiaries 31.03.2009 31.03.2008
Zeppelin Mobile Systems India Limited India 74.00% 74.00%Bright AutoPlast Private Limited India 100.00% 99.99%Sintex Holdings B.V. Netherlands 100.00% 100.00%Sintex France SAS France 100.00% 100.00%Sintex Holding USA, Inc. USA 100.00% 100.00%Sintex Industries UK Limited UK 100.00% 100.00%Sintex Austria B.V. (w.e.f. July 15, 2008) Netherlands 100.00% –Amarange Inc. (w.e.f. April 24, 2008) British Virgin Island 100.00% –Wausaukee Composites Inc. USA 81.00% 81.00%Wausaukee Composites- Owosso, Inc. (Previously known as Nero Plastic Inc.) USA 81.00% 81.00%WCI Wind Turbine Components, LLC (w.e.f. August 27, 2008) USA 81.00% –Nief Plastic Holding SAS France 100.00% 100.00%Nief Plastic SAS (Previously known as Nief Plastic SA) France 100.00% 100.00%NP Hungaria Kft Hungary 100.00% 100.00%NP Nord SAS France 100.00% 100.00%NP Slovakia SRO Slovakia 100.00% 100.00%NP Savoie SAS France 100.00% 100.00%NP Tunisia SARL Tunisia 100.00% 100.00%NP Vosges SAS France 100.00% 100.00%Segaplast SAS France 100.00% 100.00%Segaplast Maroc SA (Previously known as Segaplast SA) Morocco 100.00% 100.00%Siroco SAS France 100.00% 100.00%Thermodole SAS France 100.00% 100.00%AIP SAS (w.e.f. October 23, 2008) France 100.00% –Owosso Real Estate LLC USA 81.00% 81.00%Cuba City Real Estate LLC USA 81.00% 81.00%
70 Sintex Industries Limited
Schedules forming part of the Consolidated Account
Unutilised FCCB proceeds amounting to Rs. 805.62 crore have been invested in fixed deposits and Rs 26.23 crore have been lying in CurrentAccount with banks at the year end.
7) The Company raised Rs. 589.50 crore (USD 150 million) by issuing 1,25,42,553 Equity Shares of Rs. 2 each to Qualified Institutional Buyers("QIBs") at a premium of Rs. 468 per share in February, 2008.
The proceeds of above issue have been utilised on an overall basis as set out below:
Unutilised QIB proceeds amounting to Rs. 71.17 crore have been invested in Fixed Deposits with banks.
8) The foreign subsidiaries have provided depreciation on all the assets on straight line basis over the estimated useful life of the assets. TheFrench subsidiaries have provided the liabilities for the retirement benefits as per the local laws applicable to them. The impact of differentaccounting policies followed by the subsidiaries, in the opinion of the management, would not be significant in the context of the ConsolidatedFinancial Statements.
Particulars Rs. in crore
QIB issue expenses directly paid 10.53Capital Expenditure (including Capital Work in Progress) 385.30Repayment of Working Capital 122.50
Schedule - 20 NOTES FORMING PART OF THE CONSOLIDATED ACCOUNTS (Contd..)
2008-09 2007-08
2) Estimated amount of contracts remaining to be executed on capital accounts and not provided for 15.11 36.573) Contingent liabilities in respect of:
a) Amount of claim of certain retrenched employees for Amount not Amount notre-instatement with back wages. ascertained ascertained
b) Corporate Guarantee given to bank/institution 20.92 –c) Performance guarantees given to customers by the bankers 67.87 57.11d) Disputed demands/claims not acknowledged as debts against which the Company
has preferred an appeali) Income Tax 11.20 0.52ii) Excise Duty 1.47 3.37iii) Custom Duty 0.28 0.28iv) Sales Tax 0.47 0.89v) Stamp Duty – 0.37vi) Others 0.01 0.01
(Rs. in crore)
4) The Scheme of Arrangement (the "Scheme") between the Company and its equity shareholders was approved by the Board of Directors videits resolution dated June 30, 2008, by the shareholders in their Court convened meeting held on September 15, 2008 and by the HonourableHigh Court of Gujarat vide its order dated March 25, 2009. The Appointed Date of Scheme is April 1, 2008. The Company has filed the Orderwith the Registrar of Companies, Gujarat within the time specified in the Order and the Scheme has been given effect to in these financialstatements. Accordingly, as per the Scheme, from the said date, the Company has earmarked Rs. 200 crore from Securities Premium Reserveto International Business Development Reserve Account (the "IBDR").
As per the Scheme, the balance of IBDR so earmarked is available towards such expenses as specified under the Scheme. Accordingly, duringthe year, the Company has adjusted against the earmarked balance of IBDR an amount of Rs. 130.73 crore being such specified expenses ofthe nature of cost of investments, professional fees, legal fees, finance charges, due diligence expenses and other such expenses incurred inrespect of acquisition of a target overseas company. The said accounting treatment has been followed as prescribed under the Scheme and ithas no impact on the profit for the year, as per the Scheme.
5) Pursuant to letter dated March 20, 2009 received from the Promoter Group Companies regarding expression of their unwillingness to exercisetheir conversion right of 10512000 Convertible Share Warrants to be converted into Equity Shares of the Company, as per Chapter - XIII ofSEBI (Disclosure & Investor Protection) Guidelines, 2000, the Company has forfeited 10% upfront amount of Rs. 47.80 crore received at thetime of allotment of warrants. Accordingly, the said amount has been transferred during the year to Capital Reserve.
6) The Company issued Zero Coupon Foreign Currency Convertible Bonds ("FCCBs") aggregating to US$ 225 million on March 12, 2008 forfinancing foreign currency expenditure for expansion plans in existing businesses, investments in overseas joint ventures and/or wholly ownedsubsidiaries, international acquisitions and others.
The proceeds of the above issue have been utilised on an overall basis as set out below:
71Annual Report 2008-09
Schedules forming part of the Consolidated AccountSchedule - 20 NOTES FORMING PART OF THE CONSOLIDATED ACCOUNTS (Contd..)
10) ESOPi) The Company initiated "The Sintex Industries Limited Employee Stock Option Scheme, 2006" (the "Scheme") for all eligible employees in
pursuance of the special resolution approved by the shareholders in the Extraordinary General Meeting held on February 24, 2006. TheScheme covers all directors and employees (except promoters or those belong to the promoters' group) of the Company and directors andemployees of all its subsidiaries. Under the Scheme, the Compensation Committee of the Board (the "Committee") administers the Schemeand grants stock options to eligible directors or employees of the Company and its subsidiaries. The Committee determines the employeeseligible for receiving the options and the number of options to be granted subject to overall limit of 10,000 options per annum for eachemployee. The vesting period is at the expiry of thirty six months from the date of the grant of option. The Committee has decided theexercise price of Rs. 91.70 per equity share as per clause 8.1 of SEBI (Employees Stock Option Scheme and Employee Stock PurchaseScheme) Guidelines, 1999.
ii) The Company has given loan to Sintex Employees Welfare Trust (ESOP Trust) towards subscribing 10,00,000 equity shares of the Companyat Rs. 91.70 per share aggregating to Rs. 9.17 crore. On August 21, 2006, the Company issued 10,00,000 equity shares of the face valueof Rs. 2 each to ESOP Trust at Rs. 91.70 per share.
iii) During the year, the Company granted 3,36,500 (previous year 6,63,500) options to eligible employees at Rs. 91.70 per share. The detailsof outstanding options are as under:
2008-09 2007-08
Directors’ Remuneration of holding company:a) Chairman/Vice Chairman Remuneration (Two)
Salary 0.53 0.40Commission 1.60 1.60Contribution to Provident Fund and Superannuation Fund 0.14 0.10Perquisites in cash or in kind 0.38 0.28Total 2.65 2.38
b) Managing Directors' Remuneration (Three)Salary 0.97 0.64Commission 2.10 2.10Contribution to Provident Fund and Superannuation Fund 0.26 0.17Perquisites in cash or in kind 0.72 0.48Total 4.05 3.39
Grand Total 6.70 5.77
(Rs. in crore)9) The Profit and Loss Account includes:
Particulars 2008-09 2007-08
Options outstanding as at beginning of the year 663500 NilAdd: Options granted during the year 336500 663500Less: Options exercised during the year Nil NilLess: Options forfeited during the year Nil NilOptions outstanding at the end of the year 1000000 663500
2008-09 2007-08Gratuity Leave Gratuity Leave
Particulars Encashment Encashment
i Expense recognised in Profit and Loss Account andincluded in Schedule 16 "Employees Emoluments”Current Service Cost 1.39 0.84 1.14 0.60Interest Cost 0.95 0.36 0.80 0.28Expected return on plan assets (0.72) – (0.62) –Net actuarial losses (gains) 0.72 0.21 0.67 0.57Total Expenses 2.34 1.41 1.99 1.45
11) Employee Benefitsa) Defined Benefit Plans (Rs. in crore)
72 Sintex Industries Limited
Schedules forming part of the Consolidated Account
12) The Deferred Tax Liability / Asset comprises of tax effect of timing differences on account of:
As at March 31, 2009
vi Actuarial Assumptions:Discount Rate 7.75%Expected rate of return on plan assets 9.00%Expected rate of salary increase 6.00%Mortality LIC (1994-96) published table of ratesWithdrawal Rates Suitable rates based on attained ageRetirement age 60 yearsActuarial Valuation Method Projected Unit Credit Method
vii The Group has Defined Benefit Plans for Gratuity to its employees, contribution for which are made to Life Insurance Corporation ofIndia who invests the funds as per Insurance Regulatory and Development Authority Guidelines.
b) Defined Contribution PlansRs. 6.43 crore (previous year Rs. 4.32 crore) recognised as an expense and included in the Schedule 16 of Profit and Loss Account underthe head “Contribution to Provident, Superannuation and Gratuity Fund”.
Particulars 31.03.2009 31.03.2008
Deferred Tax LiabilityDifference between book and tax depreciation 166.22 118.94Others 6.91 0.17Total 173.13 119.11Deferred Tax AssetDisallowances under Income Tax (14.45) (8.66)Provision for doubtful debts & advances (0.51) (0.45)Unabsorbed Depreciation (16.21) (3.08)Total (31.17) (12.19)Deferred Tax Liability (Net) 141.96 106.92
(Rs. in crore)
Schedule - 20 NOTES FORMING PART OF THE CONSOLIDATED ACCOUNTS (Contd..)
2008-09 2007-08Gratuity Leave Gratuity Leave
Particulars Encashment Encashment
ii Reconciliation of opening and closing balances of changesin present value of the defined benefit obligation:Opening Balance of defined benefit obligation 12.22 4.76 10.08 3.59Acquisition Adjustment 0.10 – – –Current Service Cost 1.39 0.84 1.14 0.60Interest Cost 0.95 0.36 0.80 0.28Actuarial losses (gains) 0.70 0.21 0.69 0.57Liabilities extinguished on settlements – – – –Benefits paid (0.60) (0.66) (0.49) (0.28)Closing Balance of defined benefit obligation 14.76 5.51 12.22 4.76
iii Reconciliation of opening and closing balances ofchanges in the fair value of plan assets:Opening Balance of plan assets 7.33 – 6.42 –Acquisition Adjustment 0.14 – – –Expected returns on plan assets 0.72 – 0.62 –Actuarial gains (losses) (0.02) – 0.02 –Assets distributed on settlements – – – –Contribution by employer 1.47 – 0.74 –Benefits paid (0.60) – (0.47) –Closing Balance of plan assets 9.04 – 7.33 –
iv Net Liability recognised in the Balance SheetClosing Balance of defined benefit obligation 14.76 5.51 12.22 4.76Closing balance of fair value of plan assets 9.04 – 7.33 –Present value of unfunded obligation recognised as liability 5.72 5.51 4.88 4.76
v Actual return on plan assets 0.71 – 0.64 –
(Rs. in crore)
73Annual Report 2008-09
Schedules forming part of the Consolidated AccountSchedule - 20 NOTES FORMING PART OF THE CONSOLIDATED ACCOUNTS (Contd..)
14) LeasesA) Finance Lease
i) In accordance with Accounting Standard 19 'Leases' issued by the Institute of Chartered Accountants of India, the assets acquired onfinance lease are capitalised and a loan liability is recognised. Consequently, depreciation is provided on such assets. Installments paidare allocated to the liability and the interest is charged to the Profit and Loss Account.
ii) a) Assets acquired on Lease Agreements mainly comprise of vehicles. The agreements provide for reimbursement of taxes, levy, etc.imposed by any authorities in future. There are no exceptional / restrictive covenants in the Lease Agreements.
b) The minimum installments and the present value as at March 31, 2009 of minimum installments in respect of assets acquiredunder the Lease Agreements are as follows:
Particulars 2008-09 2007-08
Basic Earnings Per Share before Extra Ordinary ItemsProfit attributable to the shareholders (Rs. in crore) A 325.12 230.32Weighted average number of Equity Shares outstanding during the year B 135495433 117872309Nominal value of Equity Shares (Rs.) 2.00 2.00Basic Earnings Per Share (Rs.) A/B 24.00 19.54Diluted Earnings Per Share before Extra Ordinary Items :Profit attributable to the shareholders (Rs. in crore) A 325.12 230.32Weighted average number of Equity Shares outstanding during the year B 135495433 117896358Nominal value of Equity Shares (Rs.) 2.00 2.00Diluted Earning Per Share (Rs.) A/B 24.00 19.54
13) Earnings per share (EPS) -The numerators and denominators used to calculate Basic and Diluted Earnings Per Share
No. of shares No. of shares
Weighted average number of Equity Shares outstanding during the year for Basic EPS 135495433 117872309Add : Dilutive potential Equity Shares – 24049Weighted average number of Equity Shares outstanding during the year for Dilutive EPS 135495433 117896358
Particulars 31.03.2009 31.03.2008
Minimum Installmentsi) Payable not later than 1 year 0.34 0.33ii) Payable later than 1 year and not later than 5 years 0.63 0.84iii) Payable later than 5 years 0.03 0.13
Total minimum installments 1.00 1.30Less : Future Finance Charges 0.08 0.17Present value of minimum installments 0.92 1.13
Present Value of Minimum Installmentsi) Payable not later than 1 year 0.27 0.25ii) Payable later than 1 year and not later than 5 years 0.60 0.77iii) Payable later than 5 years 0.05 0.11
Total present value of minimum installments 0.92 1.13
(Rs. in crore)
B) Operating LeaseLease rentals charged to revenue for lease agreements for the right to use following assets are :
Particulars 2008-09 2007-08
Office premises 4.27 2.61Residential Flats for accommodation of employees 0.05 0.02
The lease agreements are executed for a period ranging between 11 to 96 months with a renewal clause and also provide for terminationat will by either party by giving a prior notice.
74 Sintex Industries Limited
Schedules forming part of the Consolidated AccountSchedule - 20 NOTES FORMING PART OF THE CONSOLIDATED ACCOUNTS (Contd..)15) Related Party Transactions:
a) Names of related parties & description of relationship :
Sr. No. Nature of Relationship Name of Related Parties
1 Associate Companies Som Shiva Impex Ltd.BVM Finance Pvt. Ltd.Sintex International Ltd.
2 Key Management Personnel Shri Dinesh B. Patel, ChairmanShri Arun P. Patel, Vice ChairmanShri Rahul A. Patel, Managing DirectorShri Amit D. Patel, Managing DirectorShri S.B. Dangayach, Managing Director
b) Detail of transactions with related parties:
Nature of Transactions Associate Key Management TotalCompanies Personnel
2008-09 2007-08 2008-09 2007-08 2008-09 2007-08
I] Volume of transactions:A) Job Work
Som Shiva Impex Ltd. 1.22 1.09 – – 1.22 1.09B) Purchase/ Sale of Goods
Som Shiva Impex Ltd. 4.83 2.41 – – 4.83 2.41Sintex International Ltd. 0.01 0.01 – – 0.01 0.01
C) Managerial RemunerationDinesh B. Patel – – 1.33 1.19 1.33 1.19Arun P. Patel – – 1.33 1.19 1.33 1.19Rahul A. Patel – – 1.44 1.25 1.44 1.25Amit D. Patel – – 1.44 1.25 1.44 1.25S.B. Dangayach – – 1.16 0.89 1.16 0.89
Schedules forming part of the Consolidated AccountSchedule - 20 NOTES FORMING PART OF THE CONSOLIDATED ACCOUNTS (Contd..)16) Information about Business Segment
329.76 232.18Excess/(Short) Provision for taxation in earlier years (net) 2.39 –Profit After Tax Before Minority Interest 327.37 232.18Less : Minority Interest 2.25 1.86Profit After Tax 325.12 230.32
i) Segment Revenue - External Turnover- Within India 2178.98 1816.37- Within Europe 800.78 363.86- Others 240.42 154.07Total Revenue 3220.18 2334.30
ii) Segment Assets- Within India 4130.69 3582.89- Within Europe 777.80 861.68- Others 195.89 152.69Total Assets 5104.38 4597.26
iii) Segment Liability- Within India 1848.97 1782.03- Within Europe 326.46 377.54- Others 54.53 17.47Total Liability 2229.96 2177.04
iv) Capital Expenditure- Within India 572.86 428.31- Within Europe 90.86 395.76- Others 5.39 18.82Total Capital Expenditure 669.11 842.89
Note:a) The Company is organised into two main business segments, namely:
Textile - Fabric and YarnPlastic - Water Tanks, Doors, Windows, Prefab, Sections, BT Shelters, Custom Moulding, etc. Segments have been identified and reportedtaking into account the nature of products and services, the differing risks and returns, the organisation structure, and the internal financialreporting systems.
76 Sintex Industries Limited
Schedules forming part of the Consolidated AccountSchedule - 20 NOTES FORMING PART OF THE CONSOLIDATED ACCOUNTS (Contd..)
c) The Segment Revenue, Results, Assets and Liabilities include the respective amounts identifiable to each of the segment and amountsallocated on a reasonable basis.
d) Previous year's figures have been regrouped, wherever necessary.
As per our attached Rahul A. Patel Managing Director Ramnikbhai H. Ambani Directorreport of even date Amit D. Patel Managing Director Ashwin Lalbhai Shah Director
S. B. Dangayach Managing Director Dr. Rajesh B. Parikh DirectorFor Deloitte Haskins & Sells Dr. Lavkumar Kantilal DirectorChartered Accountants Rooshikumar V. Pandya Director
Indira J. Parikh DirectorGaurav J. ShahPartnerMembership No. 35701 L. M. Rathod
Company Secretary
Ahmedabad AhmedabadDate : May 9, 2009 Date : May 9, 2009
b) Segment Revenue in each of the above business segments primarily includes sales, service charges, rent, profit on sale of Fixed Assets (net),Miscellaneous sales and Export Incentive
1Annual General Meeting
NOTICE is hereby given that the Seventy Eighth Annual GeneralMeeting of the shareholders of Sintex Industries Limited will be heldas scheduled below:
DATE : October 12, 2009
DAY : Monday
TIME : 10.30 a.m.
PLACE : Registered Office: Near seven Garnala,
Kalol (N.G.) 382721.
to transact the following Business:-
ORDINARY BUSINESS1) To receive, consider and adopt, (i) the Balance Sheet as at March 31,
2009; (ii) the Profit and Loss Account for the year ended March 31,
2009; and (iii) the Reports of the Directors and the Auditors of the
Company thereon.
2) To declare a dividend on equity shares of the Company.
3) To appoint a Director in place of Shri Rooshikumar V. Pandya, who
retires by rotation and being eligible offers himself for re-
appointment.
4) To appoint a Director in place of Shri Rahul A.Patel, who retires by
rotation and being eligible offers himself for re-appointment.
5) To appoint a Director in place of Shri Amit D. Patel, who retires by
rotation and being eligible offers himself for re-appointment.
6) To re-appoint M/s. Deloitte Haskins & Sells, as the statutory auditors
of the Company and to fix their remuneration.
SPECIAL BUSINESSTo consider and, if thought fit, to pass with or without modification,
the following resolutions:
7) As an Ordinary Resolution“RESOLVED THAT in suppression of the Resolution passed at the
Extra Ordinary General Meeting held on December 24, 2007,
consent be and is hereby accorded to the Company’s Board of
Directors pursuant to Section 293(1)(d) and all other applicable
provisions of the Companies Act, 1956 and all other enabling
provisions, if any, for borrowing such sum or sums of money in any
manner, from time to time, as may be required for the purposes of
the business of the Company with or without security and upon
such terms and conditions as they may think fit, notwithstanding
that money to be borrowed together with money already borrowed
by the Company (apart from temporary loans obtained from the
Company’s Bankers in the ordinary course of business) may exceed
the aggregate of the Company’s Paid-up Share Capital and its free
reserves, that is to say, reserves not set apart for any specific
purpose, provided that, the total amount so, borrowed by the Board
of Directors and outstanding at any time, shall not exceed the sum
of Rs. 4000 crore (Rupees Four thousand crore only)”.
Registered Office: By Order of the Board of Directors
Near Seven Garnala
Kalol (N.G.) – 382 721 L. M. RathodDated: September 15, 2009 Company Secretary
1. A MEMBER ENTITLED TO ATTEND AND VOTE IS ENTITLED TOAPPOINT A PROXY TO ATTEND AND VOTE INSTEAD OF HIMSELFAND SUCH A PROXY NEED NOT BE A MEMBER OF THECOMPANY. PROXY IN ORDER TO BE EFFECTIVE MUST REACHTHE REGISTERED OFFICE OF THE COMPANY AT LEAST 48 HOURSBEFORE THE MEETING.
2. The Explanatory Statement under Section 173 (2) of the Act isenclosed.
3. Register of Members and Share Transfer Books of the Companyshall remain closed from October 1, 2009 to October 12, 2009(both days inclusive).
4. The annual accounts, the reports and all other documents requiredunder the law to be annexed thereto will be available for inspectionduring working hours at the Registered Office of the Company onany working day except Saturdays and Sundays prior to the date of
the Annual General Meeting.
5. Dividend recommended by the Directors, if approved by themembers at the Annual General Meeting, will be paid on or afterOctober 16, 2009 to those members whose names appear on theRegister of Members as on October 12, 2009. In respect of sharesheld in electronic form, the dividend will be payable on the basis ofbeneficial ownership as at the close of September 30, 2009, as perthe details furnished by the National Securities Depository Limited(“NSDL”)/ the Central Depository Service (India) Limited (“CDSL”) forthe purpose as on that date.
6. Pursuant to Section 205A(5) of the Act, dividend which remainedunpaid/unclaimed upto the financial year ended March 31, 2001was transferred to the Investor Education and Protection Fund,established by the Central Government pursuant to Section 205C ofthe Act. Dividends which remains unclaimed/ unpaid for a period of
NOTES :
2 Sintex Industries Limited
seven (7) years from the financial year ended March 31, 2002 willbe transferred by the Company to the aforesaid Fund, as and whenfalls due.
7. Members desirous of seeking any information on the AnnualAccounts to be explained at the meeting are requested to send theirqueries in writing to the Company at the Registered Office so as toreach at least seven (7) days before the date of the meeting to makethe required information available.
8. Members holding shares in physical form are requested to notify/send the following to the Company’s Registrar and Transfer Agentat Pinnacle Shares Registry Pvt. Ltd., Nr. Ashoka Mills, Naroda Road,Ahmedabad – 380 025 at the earliest but not later than October12, 2009.
• Any change in their address/ mandate/ bank details and
• Particular of their bank account, in case the same was not sent
earlier.
Members holding shares in the electronic form are advised toinform change in address/bank mandate directly to their respectiveDepository Participants. The address/bank mandate as furnished tothe Company by the respective Depositories viz. the NSDL and theCDSL will be printed on the dividend warrant.
9. Members are requested to:• Bring their copy of the Annual Report to the Meeting as the
practice of distributing copies of accounts has beendiscontinued.
• Fill in the attendance slip for attending the meeting (membersas well as proxies)
• Bring the Client ID and DP ID numbers for easy identification ofattendance at the meeting for the members holding shares indematerialised form.
Item No. 7The shareholders are aware that the Extra Ordinary General Meeting ofthe Company held on December 24, 2007, consent of the memberswas obtained for the Directors to borrow money up to maximum of Rs. 2500 crore, irrespective of the fact that such amount together withthe money already borrowed by the Company (apart from thetemporary loans obtained from the Bankers of the Company in theordinary course of business) exceeded the aggregate of the paid upcapital and free reserves of the Company as on that date.
With a view to raising funds for future expansion project of theCompany as also the long-term working capital requirement, it is likelythat the Company may require more funds in future and it will benecessary for the Company to borrow money from time to time from
its Bankers, bodies corporate, financial institutions and others. It is,therefore, desirable to increase the said limit from Rs. 2500 crore (Rupees Two Thousand Five Hundred crore only) to Rs. 4000 crore (Rupees Four Thousand crore only). Therefore, theshareholders approval to borrow in excess of Paid-up Share Capital andfree reserves is sought.
None of the Directors are in any way concerned or interested in theaforesaid resolution.
Registered Office: By Order of the Board of DirectorsNear Seven GarnalaKalol (N.G.) – 382 721 L. M. RathodDated: September 15, 2009 Company Secretary
EXPLANATORY STATEMENT PURSUANT TO THE SECTION 173(2) OF THE COMPANIES ACT, 1956
ANNEXURE TO THE NOTICE
Name of the Director Shri Rooshikumar V. Pandya Shri Rahul A. Patel Shri Amit D. PatelDate of Birth March 27, 1940 October 4, 1959 January 29, 1966Date of Appointment January 31, 2003 October 21, 1993 October 21, 1993Expertise in specific Pioneer in the fields of Industrialist with rich business Industrialist with rich businessfunctional Area communication, stress experience in general. experience in general.
management & therapeutic.He is expert and involve in Human Resources Development
Qualification Graduated in Literature & post B. Com., MBA (USA) B. Com., MT (USA)graduate in Literature, philosophy, and psychology of religion in USA & CANADA
Director in other Public 1) Godavari Sugar Mills Ltd. Nil 1) Starline Leasing LimitedLimited Companies 2) Iycot Hitek Toolroom Ltd. 2) Zeppelin Mobile Systems IndiaLimited 3) Lamore Appearls Ltd.Membership of Committees in Audit Committee & Remuneration Nil Nilother Public Limited Companies Committee - Iycot Hitek
Toolroom Ltd.No. of Shares Held in the Nil 248545 169875Company as on 31.03.2009
Details of Director seeking appointment/ reappointment at the forthcoming Annual GeneralMeeting (Pursuant to Clause 49 of the Listing Agreement)
Please complete this Attendance Slip and hand it over at the entrance of the Meeting place. Joint Shareholders may obtain additional Attendance
Slips on request.
Name & Address of the Member(s)______________________________________________________________________________________________
Disclaimer clause : The information furnished above is certified by Sintex Industries Limited to be true, fair and accurate (except in respect of errors in or omissions from documents filed electronically that result solely from electronic transmission errors beyond our control and in respect of which we take corrective action as soon as it is reasonably practicable after becoming aware of the error or the omission). SEBI, the Stock Exchanges or the NIC do not take any responsibility for the accuracy, validity, consistency and integrity of the data entered and updated by it. Name of the compliance officer : Mr. L.M. Rathod C.F.O & Company Secretary Sintex Industries Limited Kalol (N.G.) – 382 721
